Crude Oil Plummets To End Below $95 On Demand Concerns

(RTTNews) - U.S. crude oil plunged to end sharply lower Tuesday on demand growth concerns, ahead of the weekly official oil report from the U.S. Energy Information Administration, with easing geopolitical tensions in Ukraine, Iraq and Libya. Oil prices continued to be weighed down on reports that global demand for oil is likely to decline.

Investors are looking ahead to the official crude inventory data from the U.S. Energy Information Administration due Wednesday and the American Petroleum Institute's weekly oil report later today.

Investors also continued to monitor developments in Ukraine and Iraq, even as tensions appear to be waning.

With U.S. President Barack Obama indicating continued support for Iraqi and Kurdish forces with limited airstrikes against Islamic State militants, oil shipments out of Iraq are expected to continue uninterrupted. U.S. airstrikes have helped Iraqi government and Kurdish forces to reclaim the Mosul dam and check the advance of militants at various other regions as well.

Light Sweet Crude Oil futures for September delivery, the most actively traded contract, dropped $1.93 or 2.0 percent to close at $94.48 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices for September delivery scaled a high of $97.05 a barrel intraday and a low of $94.61.

On Monday, crude oil futures ended sharply lower, as tensions between Russia and Ukraine waned with indications of a possible supply glut globally. Last week's dismal economic data from the eurozone, an unexpected increase in U.S. crude oil stockpiles and the resumption of supplies from Libya also contributed to oil's decline.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.89 on Tuesday, up from its previous close of 81.57 late Monday in North American trade. The dollar scaled a high of 81.89 intraday and a low of 81.59.

The euro ended lower against the dollar at $1.3321 on Tuesday, as compared to its previous close of $1.3364 late Monday in North American trade. The euro scaled a high of $1.3365 intraday and a low of $1.3314.

In economic news from the U.S., a report from the U.S. Labor Department showed consumer prices to have risen at a slower pace in July. The consumer price index was up by a seasonally adjusted 0.1 percent in the month, in line with expectations. Core CPI, which excludes volatile food and energy costs, also increased 0.1 percent, against forecasts for a 0.2 percent rise.

Meanwhile, data from the Commerce Department showed U.S. housing starts to have rebounded substantially in July, jumping 15.7 percent to an annual rate of 1.093 million, after falling 4 percent to a revised 945,000 in June. Economists expected housing starts to climb to a rate of 963,000 from the 893,000 originally reported for the previous month.

The U.S. Commerce Department also reported building permits, an indicator of future housing demand, to have shot up 8.1 percent to an annual rate of 1.052 million in July from the revised June rate of 973,000. Economists anticipated building permits to rise 2.5% to 1.0 million units.

From Europe, house prices in the United Kingdom rose at a slightly slower pace in June compared to May, but the pace of increase remained solid, figures from the Office for National Statistics showed Tuesday. The house price index climbed 10.2 percent year-on-year following 10.4 percent rise in May. Economists had forecast 10.2 percent gain for June.

Inflation in the U.K. eased to 1.6 percent in July from 1.9 percent in June, the Office for National Statistics reported Tuesday. Economists expected inflation at 1.8 percent. It has been below the 2 percent target since last January. Month-on-month, consumer prices fell 0.3 percent, offsetting the 0.2 percent increase in June. Economists projected a 0.2 percent drop for July.