NEW YORK (Dow Jones)--Crude futures were nearly flat Tuesday with traders keeping a close eye on movements in the currency markets as the dollar retreated from earlier strength.
Light, sweet crude for November delivery recently traded 1 cent lower at $82.20 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 14 cents higher at $83.86 a barrel.
Oil prices this week have fallen back from five-month highs above $84 a barrel, but have held above $80 a barrel ahead of expectations that the Federal Reserve will take actions meant to support the economy. Despite U.S. inventories of oil and fuel products that hit 27-year highs last month, economic data and moves in the dollar have trumped worries about oil supply and demand.
"The market has shown a much higher correlation to the broader forces at play in the economy," said Gene McGillian, a broker and analyst with Tradition Energy. By holding above $80 a barrel amid high inventories and weak demand, "It's shown a willingness to shrug off weak fundamentals."
The dollar recently hit eight-month lows against the euro and 15-month lows against the yen, making oil cheaper for buyers in those currencies. Oil rally has been tied closely to the fate of the dollar, with crude prices falling early Tuesday as the dollar strengthened, then paring those losses as the dollar reversed course.
The greenback was nearly flat recently against the euro in Tuesday trading.
The Organization of Petroleum Exporting Countries on Tuesday revised up its forecast for global oil demand growth this year, encouraged by stimulus-led economic growth in the first half of 2010.
OPEC upgraded its forecast for world oil demand growth by 100,000 barrels a day to 1.13 million barrels a day, and its non-OPEC supply forecast for 2010 was also increased by 100,000 barrels a day to 1.01 million barrels a day.
OPEC is expected to keep quotas unchanged when the group meets Thursday, despite calls from some member countries that prices should move higher due to the weakening dollar.
Meanwhile, France was hit by a nationwide strike against pension reform, and the industrial dispute that has closed the Fos-Lavera oil terminal, the world's third-largest oil port, entered its 16th day. The Marseille port authority said 85 ships have been affected, of which 56 are oil tankers.
Front-month November reformulated gasoline blendstock, or RBOB, recently traded 0.50 cent lower at $2.1605 a gallon. November heating oil recently traded 0.17 cent higher at $2.2807 a gallon.
