Oil trades lower in Asia

SINGAPORE: Oil prices eased in Asian trade Tuesday after surging the day before as investors weighed the effects of China”s announcement that it would allow a more flexible yuan currency.

New York”s main futures contract, light sweet crude for delivery in July dipped 42 cents to 77.40 dollars a barrel while London”s Brent North Sea crude for August delivery was off 45 cents at 78.37 dollars.

China”s weekend announcement it would “strengthen the flexibility” of the yuan had sent oil prices sharply higher Monday on expectations of higher demand from Chinese consumers.

Analysts had interpreted the Chinese central bank”s statement as a sign that Beijing was ready to adjust the dollar peg, which has been in place for two years, and allow the currency to rise.

China has effectively pegged the yuan at about 6.8 to the dollar since mid-2008 to prop up exporters during the world financial crisis.

Analysts said Tuesday oil prices retreated on signs that any strengthening of the yuan would be gradual.