Oil Prices Drop on Strong Dollar, Poor Growth Data
Oil prices retreated on Tuesday as the dollar strengthened, and traders digested downbeat European economic growth data and awaited news of any fresh plan to tackle the Eurozone debt crisis.
New York's main contract, West Texas Intermediate (WTI) crude for delivery in September, fell 84 cents to $87.04 a barrel.
Brent North Sea crude for September dropped $1.03 to $108.88 per barrel in midday deals.
Prices had surged Monday, with New York closing up $2.50 as global stock markets rallied and the dollar weakened, stoking demand for greenback-priced commodities.
"Crude oil prices gave back previous day's gains and slid lower more than one percent, as the strengthening US dollar against the euro weighed on the prices," said Myrto Sokou, an analyst at brokers Sucden Financial.
"In addition, the global equity markets were fairly weak... dragged lower by fairly disappointing German and Eurozone GDP (gross domestic product) data that raised renewed concerns about growth opportunities."
Investors were awaiting the outcome of talks between the Eurozone’s two biggest economies, Germany and France.
French President Nicolas Sarkozy will host German Chancellor Angela Merkel on Tuesday in Paris to try to produce a road map for the 17-nation Eurozone as it battles its growing sovereign debt crisis.
"Investors should remain cautious ahead of the meeting in Paris today," added Sokou.
On Monday, the finance ministers of Britain, Australia, Canada, Singapore and South Africa said in a statement that the world was facing a crisis of confidence and needed a global response.
The ministers warned of a lack of confidence in efforts by governments to address the issues underpinning weak growth, high unemployment and unsustainable fiscal balance sheets.
Trillions of dollars have been wiped off stock markets in a massive sell-off over the past fortnight as investors dumped shares over concerns of a global slowdown, Eurozone debt, and an unprecedented US credit rating downgrade.
The fears for the global economy have triggered volatility for oil prices in turn, as traders anticipate a deterioration in energy demand.