(AP)-- Oil prices hovered above $71 a barrel Wednesday as signs of weak crude demand were offset by the effects of a slumping U.S. dollar.
By mid-afternoon in Europe, benchmark crude for November delivery was down 44 cents at $71.32 a barrel in electronic trading on the New York Mercantile Exchange. The contract added $1.83 a barrel to settle at $71.76 on Tuesday.
Oil prices have traded between $65 and $75 for months as consumer demand in the U.S. has remained tepid despite evidence of an economic recovery.
"Brimming oil stocks around the world continue to expose demand weakness," said JBC Energy in Vienna.
U.S. oil inventories rose unexpectedly last week, the American Petroleum Institute said late Tuesday. Crude stocks increased 276,000 barrels while analysts had expected a drop of 2.25 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
"The reason oil is trading in this range is this battle between weak supply fundamentals and optimism for economic recovery," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
"This seems to be a level that both producers and consumers are happy with."
A weakening U.S. dollar, meanwhile, has helped support oil prices. Because crude is priced in dollars, investors outside the U.S. buy it up when the dollar drops. The euro rose Wednesday in European trading to $1.4817 from $1.4788 the previous day while the dollar fell to 90.99 yen from 91.15.
Olivier Jakob of Petromatrix in Switzerland said that while the Dollar Index - which values the dollar against a basket of foreign currencies - was now at same level as in September 2008, back then the Nymex contract was worth $109 a barrel.
The big difference, Jakob noted, "is that U.S. petroleum stocks are at least 140 million barrels above the levels of a year ago."
In other Nymex trading, gasoline for October delivery was down 1.72 cents to $1.7644 a gallon, and heating oil gained 0.38 cent to $1.8159 a gallon. Natural gas was up 10.9 cents to $3.718 per 1,000 cubic feet.
In London, Brent crude fell 45 cents to $70.08 on the ICE Futures exchange.
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