Crude Settles -$1 At $92.19 On Greek Debt Worries

Crude-oil futures settled 1.1% lower Tuesday as fresh worries the possibility of a Greek default reverberated through global financial markets.

A surprise call from Greece's prime minister for a referendum on a hard-fought debt restructuring plan approved by European leaders last week torpedoed the euro and sent the dollar up sharply early on. The jump in the dollar sent investors fleeing from dollar-denominated commodities, pushing Nymex crude futures below $90 for the first time six days.

The common currency rebounded late against the dollar, as political opposition in Greece cast doubt on whether the vote would take place.

Still, investors who pushed oil up to near $95-a-barrel last week on hopes that the Greek debt restructuring deal would return European economies to solid ground were reeling Tuesday amid fresh fears of a default.

"The news today has ratcheted up the fear of a default by Greece," said Gene McGillian, analyst at Tradition Energy in Stamford, Conn. "A lot of the new length that came in last week may be getting nervous," he said, raising potential for a drop back to near $85 a barrel.

Light, sweet crude oil for December delivery on the New York Mercantile Exchange settled down $1, or 1.1%, at $92.19 a barrel. Crude ended near the high of a $3 trading range. ICE North Sea Brent crude eased 2 cents to $109.54 a barrel.

The thickening drama in Greece came against a backdrop of worries about the strength of the manufacturing sector in the world's two biggest oil consuming nations.

The Institute of Supply Management's U.S. purchasing managers' index dropped to 50.8 last month from 51.6 in September. But indications of rising new orders gave some hopeful signs for fourth-quarter performance in the U.S., the world's biggest oil consumer, analysts said.

In China, the purchasing managers index, dropped to its lowest level since February 2009. The index dropped to 50.4 in October from 51.2 in September. A reading below 50 in the both the U.S. and Chinese indexes would indicate a contraction in activity.

The decline raised new concerns about the strength of China's role as the global engine for oil demand growth.

"China has really been the bright spot of the last couple of years," said McGillian said.

The International Energy Agency forecasts China will account for 52% of world oil demand growth of 1 million barrels a day this year and will be 37% of growth of 1.3 million barrels a day projected for 2012.

Analysts also were looking to U.S. weekly oil inventory data for market direction. Crude oil stocks are expected to show a 900,000-barrel rise, while gasoline stocks are expected to drop 600,000 barrels and distillates (diesel/heating oil) are expected to show a decline of 1.5 million barrels. The figures would keep stocks of crude and petroleum products near the five-year average levels, continuing a decline in the overhang of inventories that have keep downward pressure on prices in recent months.

The American Petroleum Institute, a trade group, will release its survey later Tuesday, while the federal Energy Information Administration report is due out at 10:30 a..m. ET on Wednesday.

Reformulated gasoline blendstocks futures for December delivery on Nymex settled 1.87 cents higher, at $2.6244 a gallon. December heating oil fell 2.04 cents, to $3.0379 a gallon.