Tuesday, May 16 2006 15:10 Hrs (IST) - World Time -

Singapore: Oil prices retreated in Asian trade today (May 16, 2006), extending losses after sharp falls in global commodity markets sparked by a slide in the dollar, their benchmark currency, dealers said.

At 0908 hrs IST (11:38 am) New York's main contract, light sweet crude for June delivery, was at 68.75 dollars a barrel, down 66 cents from late New York trades yesterday for the lowest level in a month and well off the record of 75.35 dollars on April 21.

Brent North Sea crude for June delivery was at 68.85 dollars, down 82 cents. Victor Shum, a Singapore-based analyst with Purvin and Gertz, said a weaker dollar was really bearish news for the oil market.

Analyst John Kilduff at Fimat USA said market conditions may cool further if the Federal Reserve continues to lift US interest rates.

"If high commodity prices and the Federal Reserve continue to successfully stem economic growth, then we may beat the beginning of the end for this five-year price rally (for commodities)," he said.

Dealers said the fall in crude prices will be limitedby the geo-political situation in Iran and fears over the imminent US hurricane season.

"In the short-term, the market will go down a little further, but geopolitics and the impending hurricane season will keep a high floor," Shum said.