Oil falls on euro zone, demand concerns
SAN FRANCISCO (MarketWatch) -- Crude futures ended Tuesday at their lowest in more than a week, hit by a higher dollar amid renewed concerns about the euro zone and as the U.S. government cut its expectations for global oil demand amid plentiful supplies.
Crude prices had lost support earlier as Norway's government averted an oil-industry lockout by stopping a strike and imposing arbitration.
Crude for August delivery (CLQ2) declined $2.08, or 2.4%, to end at $83.91 a barrel on the New York Mercantile Exchange. That was oil's lowest settlement since July 2.
Oil futures also felt the pinch of U.S. stocks at session lows and a higher dollar as concerns about Italy and actions by a German court sent the U.S. currency to its highest against the euro in two years. Read more about currencies.
Brent, Europe's benchmark, fared no better.
The August contract (LCOQ2) settled $2.35, or 2.3%, lower at $97.97 a barrel on ICE Futures in London, also the lowest since July 2.
Also weighing on crude markets, the Energy Information Administration lowered its expectations for global demand for oil for this year and the next, according to a monthly outlook report on Tuesday.
In the most recent report, global demand for this year was pegged at 88.64 million barrels per day, and demand in 2013 was seen at 89.37 mbpd.
The EIA projected New York-traded oil to average $88 a barrel in the second half of 2012, and it lowered price expectations for retail gasoline to $3.39 a gallon for the third quarter of 2012.
Prices at the pump are expected to average $3.49 a gallon this year and $3.28 a gallon in 2013, the EIA added.
August gasoline (RBQ2) ended 1 cent lower, or 0.5%, to $2.77 a gallon, while August heating oil (HOQ2) declined 3 cents, or 1.1%, at $2.72 a gallon.
Oil futures had risen sharply Monday amid the threat of a shutdown in Norway, the world's fifth-largest oil exporter. New York-traded oil ended 1.8% higher on Monday, while Europe's Brent jumped 2.2%.
The lockout in Norway had been planned for midnight Oslo time in response to the strike by offshore workers, which had been in its third week. Instead, the parties will submit to a binding decision from a national wage-arbitration tribunal.
Norway's state-controlled oil firm
"Production from these installations will be resumed as quickly as possible. It may take from one to two days to get production started, and Statoil expects to have the fields back in full production within a week," the company said in a statement.
Among other energy futures, August natural gas (NGQ12) declined 15 cents, or 5.1%, to settle at $2.74 per million British thermal units, giving back all of Monday's sharp gains. Natural-gas futures advanced 3.9% in the previous session.
Meanwhile, the EIA is scheduled to report official supply numbers on Wednesday. The American Petroleum Institute, a trade group, is slated to report later Tuesday.
Analysts polled by Platts expect crude stockpiles to be down 1.5 million barrels, while gasoline supplies are seen up 600,000 barrels. Distillates stocks are expected to increase 1 million barrels.
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