Oil drifts below $82 in Asia as month-long rally stalls

Oil drifts below $82 as month-long rally stalls

Oil prices drifted below $82 a barrel Friday as a stronger dollar helped pause a monthlong rally fueled by mostly positive news about the U.S. economy.

By early afternoon in Europe, benchmark crude for April delivery was down 49 cents to $81.71 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 73 cents to settle at $82.20 on Thursday.

Crude jumped to $83 a barrel earlier this week from $69 early last month on expectations sluggish consumer demand will eventually catch up with a steadily improving U.S. economy.

Crude seemingly maintained its inverse correlation with the dollar’s exchange rate, as a stronger dollar usually pushes down oil prices by making the commodity more expensive for investors holding other currencies.

On Friday, worries about Greece’s debts pushed the euro down to $1.3565 from $1.3679 late Thursday in New York, while the British pound slipped to $1.5154 from $1.5329.

Some analysts say investor concerns that low interest rates and massive government spending could spark inflation will help keep crude prices from a protracted downturn.

“Oil is receiving immense support from inflationary fears and a rising Dow Jones index,” Sander Capital said in a report. “Oil should stay above $80 next week.”

The Dow Jones industrial average rose 0.4 percent Thursday, the index’s eighth straight gain.

Oil prices “remain in the relatively narrow band of $10-$15, where they have been hovering since last October,” said JBC Energy in Vienna. “Support is coming from the increasingly optimistic economic outlook as reflected in the healthy development of equity markets.”

In other Nymex trading in April contracts, heating oil fell 1.76 cent to $2.1015 a gallon, and gasoline was down 1.69 cents to $2.840 a gallon. Natural gas rose 3.5 cents to $4.120 per 1,000 cubic feet.

In London, Brent crude was down 58 cents at $80.90 on the ICE futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.