Oil futures slip in Asian trade as dollar rises

SYDNEY (MarketWatch) — Crude-oil futures edged lower in electronic trading Tuesday, weighed down by a rising U.S. dollar.

Light, sweet crude for June delivery CLM11 -0.96%  declined 80 cents, or 0.7%, to $112.71 a barrel on the New York Mercantile Exchange during Asian trading hours.

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Ben Potter, market strategist at IG Markets, said “oil has had a very good run” and the slight rally in the U.S. dollar contributed to a dip in crude prices.

There had been some market speculation that the death of Osama bin Laden would prompt a selloff in crude on a reduced risk-premium attached to prices, but oil settled just 0.4% lower in North American trading following the news Monday.

Analysts at MF Global wrote in a research note that bin Laden’s death was unlikely to result in sustained weakness in energy prices, given it doesn’t alter the key drivers that have pushed energy prices higher for the past several months. Those drivers include “continued tensions in the Middle East, the ongoing stalemate in Libya, the weak U.S. dollar and record fund length flowing into the crude-oil market,” they said.

The dollar index DXY +0.40% , which measures the greenback against a basket of six major currencies, moved higher in Asian trading hours, to 73.08 from 72.052 in late North American trading on Monday. Read more about currencies.

“The greenback will likely weaken over the course of the week, returning a measure of stability to the energy markets,” analysts at MF Global said. “Only when investors see more tangible evidence of weaker macro-numbers [or] a softening oil demand, will oil prices undergo a more serious correction,’ they added.

(Source: http://www.marketwatch.com/story/oil-futures-slip-in-asian-trade-as-dollar-rises-2011-05-03?siteid=rss&rss=1)