Commodity Corner: Silver, Black Gold Lose Their Sheen
Crude oil for June delivery fell by more than $2.00 a barrel as traders interpreted a sharp one-day drop in silver futures as a harbinger of slackening fuel demand.
Oil settled at $111.05 a barrel after the May silver contract lost 7.6 percent. Some saw the steep decline as a sign that high gasoline prices, which have crossed the $4.00 threshold at retail outlets throughout the U.S., are softening oil demand.
Crude also declined under the weight of a stronger dollar, making it less attractive for investors holding other currencies. In fact, the U.S. Dollar Index that gauges the greenback's value against a basket of foreign currencies rose by 0.05 percent Tuesday.
Oil peaked at $113.22 and bottomed out at $110.30 during Tuesday's session.
June gasoline futures also fell Tuesday, losing two cents to settle at $3.33 a gallon. Gasoline traded within a range from $3.31 to $3.36.
Front-month natural gas slipped as investors, skeptical about the sustainability of recent upward price movements, decided to sell and take profits instead. Moderating temperatures and the recovery of electricity generating capacity at various nuclear power plants diminished the demand outlook for natural gas.
June natural gas lost two cents to end the day at $4.67 per thousand cubic feet. The contract price fluctuated from $4.66 to $4.72 Tuesday.