SINGAPORE - OIL prices fell below US$69 (S$100) a barrel on Wednesday in Asia, partially reversing gains sparked by a weakening US dollar.

Benchmark crude for August delivery fell 61 cents to US$68.63 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. On Tuesday, it rose US$1.74 to settle at US$69.24.

Oil came off an eight-month high near US$73 a barrel earlier this month, and has bounced around in the upper US$60s this week, as investors eye the dollar and buy crude as protection against possible inflation down the road.

'Crude is following the dollar,' said Jonathan Kornafel, Asia director for market-maker Hudson Capital Energy in Singapore.

'Right now, crude is largely being bought as an inflation hedge.' The euro was slight higher at US$1.4098 on Wednesday. The dollar fell 2.37 cents against the euro on Tuesday.

A three-month rally that brought crude from below US$35 a barrel in March stalled this month on growing doubts the world economy will be in recovery mode by the end of this year.

Traders also expect volatility to ease over the next couple months as many investors take summer holidays.

'July and August are typically very dead trading months,' Mr Kornafel said. 'I think we're stuck in a range for now between the mid-US$60s and US$70.' In other Nymex trading, gasoline for July delivery fell 3.32 cents to US$1.86 a gallon and heating oil dropped 3.15 cents to US$1.74.

Natural gas for July delivery was steady at US$3.88 per 1,000 cubic feet.

In London, Brent prices fell 62 cents to US$68.18 a barrel on the ICE Futures exchange. -- AP