SINGAPORE: Oil prices hovered near $71 a barrel Wednesday in Asia after a weakening U.S. dollar sent crude soaring overnight.

Benchmark crude for October delivery was up 2 cents at $71.12 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.

On Tuesday, the contract gained $3.08 to settle at $71.10 as the dollar fell to a low for the year against the euro and gold prices surpassed $1,000 an ounce for the first time since February.

Some investors buy oil, gold and other commodities as a hedge against a weakening dollar and inflation.

The euro was steady at $1.4488 in Asian trading while the dollar edged up to 92.32 yen.

"People are selling dollars for higher-yielding currencies, and that's driving oil higher," said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore.

"Keep an eye on the dollar and the $74 level," he said. "If oil breaks that, it could shoot to $80 or $85 in the short-term."

Investors will also be looking to the Organization of Petroleum Exporting Countries, which produces about 40 percent of the world's output, as it mulls production targets at a meeting later in the day.

Saudi Arabian Oil Minister Ali Naimi said Tuesday that crude markets were "in good shape," boosting expectations OPEC will to stress compliance with output quotas instead of cutting production.

In other Nymex trading, gasoline for October delivery was steady at $1.83 a gallon, and heating oil held at $1.78 a gallon. Natural gas rose 4.2 cents to $2.85 per 1,000 cubic feet.

In London, Brent crude was down 12 cents to $69.30.