Oil drifts above $71 as investors eye inflation

Oil prices hovered above $71 a barrel in Asia Friday amid concerns that massive US fiscal spending will spark inflation down the road, making oil and other commodities attractive hedges. Benchmark crude for July delivery rose 10 cents to $71.47 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. On Thursday, it rose 34 cents to settle at $71.37. Oil has lingered above $70 a barrel this week, near eight-month highs, on investor optimism the global economy is stabilizing from a severe slowdown. Traders are also buying crude, whose price has doubled since March, and other commodities as protection against possible inflation and a weaker dollar. "As an inflation hedge, oil is very popular right now," said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "The theme of the market is the inflation scare, and it's getting more pronounced. Crude is seen as a safe bet in this environment."