Oil prices dropped below $70 a barrel in New York as the dollar gained, limiting investor demand for commodities as a hedge against inflation.

Crude oil for July 2009 delivery dropped as much as $0.72, or 1%, to $69.90 a barrel in electronic trading on the New York Mercantile Exchange. It was traded at $70.16 a barrel at 11.04am Singapore time. On 15 June it fell $1.42, or 2%, to settle at $70.62 a barrel.

Crude oil dropped for a third day as the dollar gained versus 15 of the 16 main currencies on the assumption leaders from Brazil, Russia, India and China meeting on 16 June to talk about the financial crisis will signal support for the dollar. Asian stock markets drop, eroding optimism that fuel demand may raise.

Asian equities dropped for a second day after a report on 15 June showed that manufacturing in New York dropped. The MSCI Asia Pacific Index sank 0.9% to 102.73 as of 9.21am in Tokyo. Japan’s Nikkei 225 stock average fell 1.4%.

On 15 June a global slide in equities dragged down the Standard & Poor’s 500 Index from a seven-month high. The S&P 500, which had increased 40% from a 12-year low on 9 March, decreased 2.4% to 923.72. The Dow Jones Industrial Average tumbled 187.13, or 2.1%, to 8,612.13.

The yen and dollar strengthened against higher-yielding currencies on the assumption a drop in stocks will spur demand for safer assets.

The dollar increased to $1.3767 per euro from $1.3803 on 15 June, when it strengthened 1.5%.

US crude oil inventories most likely dropped in the week ended 12 June as refiners ramped up output and increased stockpiles of gasoline and heating oil, a news survey showed.

Crude-oil supplies most likely fell two million barrels last week from 361.6 million barrels the previous week, as per the median of five estimates by analysts before an Energy Department report.

Brent crude for August 2009 delivery dropped as much as $0.69, or 1%, to $69.55 a barrel on London’s ICE Futures Europe exchange. The contract lost $1.56, or 2.2%, on 15 June to $70.24 a barrel. The July future expired on June 15 at $69.44 a barrel.