Watch CBSN Live

Oil Stays Near $79 Amid Rising U.S. Supply

Oil prices fell below $79 a barrel Wednesday in Asia as investors mulled rising U.S. oil inventories and a weaker dollar.

Benchmark crude for December delivery was down 14 cents to $78.91 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 38 cents to settle at $79.05 on Tuesday.

U.S. oil inventories rose last week, the American Petroleum Institute said late Tuesday. Crude stocks increased 1.2 million barrels while analysts had expected a rise of 1.0 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The Energy Information Administration is scheduled to release its supply data on Thursday.

Crude traders are also watching a volatile dollar closely. A weaker dollar makes oil cheaper for investors buying the commodity with non-dollar currencies.

The euro rose to $1.5002 in Asian trading Wednesday from $1.4985 the previous day while the dollar fell to 89.60 yen from 89.81.

"Crude prices continue to be driven by the dollar and sentiment," Societe Generale said in a report. "The dollar will be, on balance, moderately bullish for crude oil prices."

Crude has bounced near $80 a barrel for the last few weeks as traders eyed mixed U.S. economic data and the threat of Ida, a one-time hurricane in the Gulf of Mexico that weakened significantly before reaching oil installations near the Gulf Coast on Tuesday.

"The reaction to the data and events has been knee-jerk in nature, and not well thought out by market participants," Societe Generale said.

In other Nymex trading, heating oil was steady at $2.05 a gallon. Gasoline for December delivery held at $1.98 a gallon. Natural gas for December delivery rose 2.3 cents to $4.49 per 1,000 cubic feet.

In London, Brent crude for December delivery fell 27 cents to $77.50 on the ICE Futures exchange.

View CBS News In