Oil Slides as Greenback Strengthens
Oil prices slid more than 2 percent on Tuesday as the dollar strengthened and weak economic data fueled concerns about demand that have helped push prices down by around 15 percent so far in May.
U.S. gasoline futures retreated again, a day after sliding nearly 5-percent on the receding threat to refineries from flooding in the Mississippi River delta.
The euro seesawed against the dollar but remained vulnerable on concerns Greece might restructure its massive debt. The dollar index, measuring it against a basket of currencies, strengthened, helped by the yen's weakness.
Concerns about the European debt crisis weighed on oil, as investors watched to see if peripheral economies such as Greece and Portugal would be able to meet their obligations.
Oil also felt pressure from news that U.S. housing starts and building permits fell in April and factory output slumped, indicating the economy got off to a weak start in the second quarter.
Brent crude for July delivery dropped $2.66 to $108.18 a barrel by 11:39 a.m. EDT (1539 GMT), falling back from an earlier $111.82 intraday peak.
U.S. crude for June delivery slipped $2.30 to $95.07 a barrel, on the day that June crude options expire on the New York Mercantile Exchange.
"Dollar strength and the poor economic data are pressuring prices this morning. The economic growth and demand thesis is ebbing before the eyes of the market," said John Kilduff, partner at the hedge fund Again Capital LLC in New York.
Fears that rising water levels on the Mississippi River would affect eight refineries in Louisiana have abated following news U.S. army engineers began opening flood gates.
"Today's decline in gasoline is a follow-through from yesterday's selling as the threat of refineries being affected by the flooding caused by the swollen Mississippi River has dissipated," said Tom Knight, trader at Truman Arnold in Texarkana, Texas.
"People who bought on the threat refiners would be affected by the floods sold yesterday and we're seeing this again today."
Investors also anticipated weekly oil inventory reports on U.S. stockpiles, starting with the industry group American Petroleum Institute's data due at 4:30 p.m. EDT (2030 GMT) on Tuesday,
U.S. crude inventories are expected to have risen for the fourth straight week as higher imports outpaced refinery demand, a preliminary Reuters poll of analysts showed on Monday.
Gasoline and distillate stockpiles were also expected to be higher.
(Additional reporting by Gene Ramos in New York, Emma Farge and Simon Falush in London and Florence Tan in Singapore; Editing by David Gregorio)