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  • Oil eases in Asian trade

    Published on May 3, 2011

    Oil eased in Asian trade on Tuesday as traders digested news of Osama bin Laden’s death, but prices look set to be tied to the Arab world unrest and the dollar’s value in the long run, analysts said.

    New York’s main contract, light sweet crude for June delivery, was down 59 cents to USD 112.93 and Brent North Sea crude for June eased 68 cents to USD 124.44.

    “Oil has gone through some gyrations since the news (on) Osama bin Laden,” said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.

    “It is holding relatively flat, but oil markets remain vulnerable to geo-political risks with or without bin Laden and so oil prices continue to be affected by the unrest in the Arab world and the low value of the US dollar,” Shum told.

    New York’s contract plunged to USD 110 after the news of bin Laden’s death broke Monday, but reversed course to peak at USD 114.83 before easing back.

    Matt Smith at Summit Energy said that eventually people realised that the Al-Qaeda leader’s death “will increase uncertainty more than add clarity” as his followers might carry out more attacks to show they have not been defeated.

    Investors are also monitoring political unrest in the oil-producing Arab world and its impact on crude supplies.

    The dollar was up against the euro in early Asian trade on Tuesday as markets revelled in the Al-Qaeda leader’s death.

    However, analysts said that the fragile nature of the US economy is likely to resume eating into the greenback’s strength in the near term.

    A weaker US currency makes dollar-priced oil cheaper, boosting demand and leading to higher prices.