Oil prices fall on higher dollar, China concerns
World oil prices sank on Tuesday, weighed down by a firmer dollar and concerns that China might tighten monetary policy to rein in inflationary pressures, analysts said.
New York's main contract, light sweet crude for delivery in December, shed 98 cents to 83.88 dollars per barrel.
Brent North Sea crude for December fell 70 cents to 86.06 dollars a barrel in London trade.
"Several factors are keeping a lid on oil prices at the moment," said Westhouse Securities analyst David Hart.
"Among these, rising inflation expectations in Asia are increasing concerns that growth in the region will be reined back which would, in turn, moderate increases in crude demand.
"A stronger dollar is also not helping, as debt woes in Europe continue to weigh on the euro," he added.
Data released last week showed that Chinese consumer prices rose at their fastest pace in more than two years in October, reviving worries that the authorities might hike interest rates again.
Chinese spending might be affected if monetary policy is tightened further, and there are some who worry this will reduce China's appetite for commodities including energy products.
"One of the factors was fear that China would tighten monetary policy to curb inflation," said Ong Yi Ling, an investment analyst with Phillip Futures in Singapore. "There are lingering concerns about the impact on the commodities market," she added.
Meanwhile, the European single currency neared a two-month low against the dollar on Tuesday, as euro finance ministers gathered in Brussels to address Ireland's growing debt crisis.
In overnight trade, the euro sank as low as 1.3561 dollars -- the lowest level since September 30 -- before pulling back to 1.3582 dollars in morning London deals, unchanged from late in New York on Monday.
A stronger greenback weighs on dollar-denominated oil which makes it more expensive for buyers using stronger currencies.
© 2010 AFP