Oil prices trading flat on lower dollar, awaits US markets

Oil prices are trading flat on Tuesday as the US dollar sinks lower and it seems that many investors are once again awaiting the US market open to get a better picture of short term oil price direction.

In London, Brent crude oil futures for September 2010 delivery was at $77.54, 12.00 GMT on the ICE Futures Exchange, while US Light crude oil futures was at $79.09 on the NYMEX.

The ICE Dollar Index which tracks a basket of currencies was down to 82.074 today.

After a modestly positive start to the week on Monday, investors seem freshly emboldened this morning following a good performance on Wall Street, good banking results and a positive reaction to BP’s quarterly numbers.

US stock markets have underpinned oil prices as traders often look to stock markets as a barometer of overall investor sentiment. The Dow Jones industrial average rose one percent yesterday and is up about four percent in the last three trading sessions.

“We still see a relatively close linkage between the stock market and the oil for now,” Ritterbusch and Associates said.