Forex Pros – Crude oil futures were down for a third day on Tuesday, as growing fears that the euro zone’s sovereign debt crisis could spread to the region’s core economies lifted the dollar, reducing the appeal of commodities.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at USD93.83 a barrel during European morning trade, retreating 1.4%.
It earlier fell as much as 1.7% to trade at USD93.56 a barrel, the lowest price since July 1.
The euro tumbled to a four-month low against the greenback after International Monetary Fund Chairwoman Christine Lagarde said earlier that the institution was not ready to discuss terms of a second bailout package for Greece, adding to investors nervousness over the region’s debt crisis.
The cost of insuring Italian government debt against default rose above 6% for the first time since the inception of the single currency on Tuesday, while Spanish government bond yields continued to climb higher.
European Union finance ministers were set to meet later in the day to hold further discussions ahead of an Italian bond auction later in the week.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gained 1% to trade at 77.13, the highest level since March 15.
Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Meanwhile, markets were awaiting fresh information on U.S. stockpiles of crude and refined products.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show stockpiles declined by 2.0 million barrels last week, while gasoline stockpiles were projected to increase by 0.5 million barrels.
Energy traders have been closely eyeing U.S. gasoline stockpiles as the nation’s driving season entered its peak gasoline demand period.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery slumped 1.7% to trade at USD114.50 a barrel, up USD20.67 on its U.S. counterpart.
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