Commodity Corner: Oil Falls 3%
A stronger dollar, coupled with fears of slower economic growth in Asia, contributed to a three-percent drop in December oil futures Tuesday.
Crude oil settled at $82.34 a barrel, compared to $84.86 on Monday, as the euro weakened amid reports that the European Union seeks to counter Ireland's debt problems with a bailout. Bailing out Ireland, which is struggling with the burden of having nationalized three banks to cope with its real estate bust, could create new problems for large banks and have a chilling effect on lending elsewhere in the EU.
In Asia, efforts to curb the rate of inflation stoked concerns that oil demand will soften. South Korea's central bank has boosted interest rates to combat inflation, and China is expected to implement its own monetary policy tightening measures.
Crude oil peaked at $84.74 and bottomed out at $82.26.
Natural gas for December delivery also slumped Tuesday, settling roughly 2.5 cents lower at $3.82 per thousand cubic feet. According to the National Oceanic and Atmospheric Administration (NOAA), temperatures throughout the Northeast and Midwest should not be colder than normal through next week. As a result, demand for natural gas-fired electricity is expected to remain at normal levels during the period.
The price of front-month natural gas fluctuated from $3.78 to $3.92.
December gasoline also lost ground Tuesday, settling 3.5 cents lower to $2.16 a gallon. It traded from $2.14 to $2.20.