Oil prices ease in Asian trade

SINGAPORE: Oil traded lower in Asia on Wednesday after a strong rebound overnight, but prices remain under pressure from a weak dollar and the political crisis gripping crude producer Iran, analysts said.

In morning trade, New York's main futures contract, light sweet crude for delivery in August, fell 87 cents to 68.37 dollars a barrel. It bounced 1.74 dollars to end at 69.24 dollars in the US Tuesday.

London's Brent North Sea crude for August dipped 91 cents to 67.89 dollars after surging 1.82 dollars overnight.

Analysts said weakness in the US dollar helped push prices higher. A fall in the greenback makes dollar-priced oil cheaper for buyers holding stronger currencies, which tends to boost demand and lift prices.

DBS Group said investors will be watching any decision later Wednesday by the US Federal Open Market Committee (FOMC) on interest rates because of its impact on the dollar.

"After the strong rebound in currencies... all eyes will be on (the) FOMC meeting to see if they can extend their appreciation," DBS said in a research note.

"To resume the US dollar's decline, the market wants the Fed to assure that it is not about to hike rates anytime this year."

Oil prices on Tuesday tumbled below 67 dollars, in line with falling stock markets and worries over a global economic recovery.

The political crisis in Iran is weighing on the market. Tehran has refused to overturn the result of disputed the presidential election and US President Barack Obama said there were significant questions about the vote's legitimacy.

Iran produces about 3.8 million barrels of crude oil per day and is the third biggest global crud exporter after Russia and Saudi Arabia.

Analysts fear the crisis could force the Iranian government to cut off oil supplies or block the Strait of Hormuz - a crucial passageway for oil tankers.

"There could be a rude awakening (for the oil market) if tensions in Iran escalate further," said VTB Capital analyst Andrey Kryuchenkov.