Oil hovers in Asia as US crude inventories plunge

       Oil prices hovered near $72 a barrel yesterday in Asia as a drop in US crude inventories suggested demand may be picking up.
       Benchmark crude for October delivery was down 9 cents at $71.85 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Thursday, the contract rose 63 cents to settle at $71.94.
       Crude has traded between $65 and $75 for a few months as investors struggle to gauge the strength of the global economic recovery. Evidence of a sustained rebound in crude consumption would likely trigger a break out of that price range.
       The Energy Information Administration said Thursday that crude inventories fell by 5.9 million barrels last week,more than three times estimates of analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.
       Oil has jumped $4 this week as investors eyed rising stock markets and a slumping US dollar.
       The Dow Jones industrial average rose 0.8% Thursday for its fifth day of gains.Meanwhile, the euro rose yesterday in Asian trading to $1.4598 from $1.4574 the day before and the dollar dropped to 90.97 yen from 91.77 yen.
       The Organisation of Petroleum Exporting Countries, which decided to leave output levels unchanged at a meeting Thursday in Vienna, said it was cautious about the outlook for an economic recovery.There remains great concern about the magnitude and pace of this recovery,said Opec, which pumps about 40% of the worlds oil production
       In other Nymex trading, gasoline for October delivery rose 0.64 cent to $1.81 a gallon, and heating oil was steady at $1.79 a gallon. Natural gas fell 2.0 cents to $3.24 per 1,000 cubic feet.
       In London, Brent crude was up 5 cents to $69.91.
       The under-performing greenback,which fell to a new 2009 low against the euro Thursday, drove investors to dollar-priced commodities including oil which becomes cheaper for holders of other currencies.Investors increased appetite for risk has clearly taken its toll on the dollar since the spring, said analysts from London-based Capital Economics Consultancy.This week it touched a new low for the year against the euro, they said.
       The euro breached $1.46 Thursday,hitting a nine-month high of $1.4613 as risk appetite increased, which typically leads to a weakened greenback.
       During economic uncer tainty, investors turn to the US dollar for its safe haven status but when sentiment improves, they usually favour other high-yielding assets.