After peaking at its highest in two years Monday, oil prices tumbled to $89.38 a barrel Tuesday. The $2.17-drop came as investors questioned whether crude prices had risen too quickly. Analysts believe sentiment to have been too bullish, over-extending the market.
A strong dollar contributes to the decline in oil prices. The greenback gained 0.3 percent against the euro Tuesday. Commodities become more expensive to buyers using foreign currencies as the dollar increases.
The intraday range for oil was $88.36 to $92.07 Tuesday.
Meanwhile, natural gas continued climbing to a five-month high on colder-than-average forecasts and expectations of a decrease in U.S. inventories. Natural gas prices increased 1.9 cents, settling at $4.67 per thousand cubic feet on the New York Mercantile Exchange (NYMEX).
The 0.4 percent increase came as meteorologists anticipate colder temperatures in mid-January--the coldest of the winter. Cooler temperatures increase heating demand, thus boosting gasoline interest.
Front-month natural gas prices fluctuated between $4.56 and $4.71 Tuesday.
In other NYMEX trading, gasoline prices dropped 1.33 cents to $2.41 a gallon, after trading between $2.37 and $2.445.
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