SINGAPORE: Oil prices hovered above US$70 a barrel Wednesday in Asia as investors weighed mixed signals from the U.S. economy amid tumbling equity markets.

Benchmark crude for July delivery rose 10 cents to US$70.57 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange.

On Tuesday, it fell 15 cents to settle at $70.47.

Oil prices this week have come off eight-month highs near $73 a barrel amid some signs that the U.S. economy - while past the worst of a severe recession - is still weak.

The Federal Reserve said Tuesday that industrial production fell a larger-than-expected 1.1 percent in May.

After a rally of almost 40 percent since March 9, the Dow Jones industrial average has fallen 3.3 percent over the first two days of the week.

Meanwhile, the Commerce Department said home construction jumped in May by the largest amount in three months after hitting a record low in April.

"There have been some mixed signs," said Toby Hassall, an analyst with investment firm Commodity Warrants Australia in Sydney.

"The last few days we've seen a turn toward negative sentiment. Oil looks set for a correction."

Crude traders have also been watching the dollar.

A weakening dollar helped fuel a doubling of the oil price since March as investors often look to commodities such as crude as a hedge against inflation.

The euro gained to $1.3867 on Wednesday from $1.3813 on Tuesday.

"Oil will likely drift below $70 and maybe to $65." Hassall said.

"It's been a very strong rally, driven by sentiment rather than data, which makes it look vulnerable to a correction."

In other Nymex trading, gasoline for July delivery fell 2.21 cents to $2.05 a gallon and heating oil was steady at $1.83.

Natural gas for July delivery slid 2.8 cents to $4.10 per 1,000 cubic feet.

In London, Brent prices rose 7 cents to $70.31 a barrel on the ICE Futures exchange. - AP

Earlier report

Oil prices fall for third straight day

NEW YORK: Benchmark crude for July delivery declined Tuesday for the third straight day, falling 15 cents to settle at US$70.47 a barrel on the New York Mercantile Exchange.

Unlike the previous two days of trading, the dollar fell Tuesday against most major currencies.

In recent weeks, the falling dollar has been one reason that money from Wall Street has flooded into energy markets and driven crude prices higher.

Analysts are baffled by the steady rise of crude because demand for energy has been decimated by the global economic slowdown.

It's too early to say if crude prices will fall soon, but there are signs that gasoline may be near a peak.

The U.S. average price for a gallon of regular unleaded gasoline gained a half cent overnight to $2.674 Tuesday for the 49th straight day of increases, according to auto club AAA, Wright Express and the Oil Price Information Service.

That surpassed a stretch in early 2007 when prices moved up 48 straight days.

Prices on the Nymex may be heavily influenced Wednesday when the government releases the latest data on the amount of gasoline and crude in storage.

In other Nymex trading, gasoline for July delivery rose 1.7 cents to settle at $2.0711 a gallon and heating oil fell less than a penny to settle at $1.8250.

Natural gas for July delivery fell 7 cents to settle at $4.312 per 1,000 cubic feet.

In London, Brent crude prices closed flat at $70.24 a barrel on the ICE Futures exchange. - AP