Oil was flat on Wednesday after the previous day's slide as the dollar rose and dealers braced for weakening demand from Asia as some smaller consumer nations began to ease off subsidies by raising local fuel prices. US crude inched up 4 cents to $128.89 a barrel by 0620 GMT, after dropping $3.34 on Tuesday, the first day of New York Mercantile Exchange floor trade following Monday's holiday.
Oil has fallen since it hit a record high $135.09 last week. London Brent crude dipped 6 cents to $128.25 a barrel. Oil traders were also watching carefully for signs of falling demand in Asia, where smaller oil consumers Taiwan, Indonesia and Sri Lanka have all recently raised domestic fuel prices due to the soaring cost of subsidies as global prices surge.
Analysts expect the impact of hikes to be limited, and while India is also poised for a modest increase this year, the world's second-largest oil consumer, China, appears set to resist pressure to raise rates until after the summer Olympics. But demand in top consumer the United States and other developed countries, such as Japan, is already under pressure.
Oil prices have jumped nearly 40 percent this year, bolstered by a poor performing US dollar as well as growing fears about the industry's ability to keep pace with demand over the next decade due to stagnating non-Opec production growth.
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