By Alex Kennedy / AP
Singapore: Oil prices fell Tuesday in Asia to a 3-month low as a stronger dollar and weakening crude demand from China weighed on investor sentiment.
Light, sweet crude for September delivery fell 65 cents to $113.80 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.
The contract lost 75 cents overnight to settle at $114.45 a barrel, the lowest close for a floor session since 1 May.
A report from China on Monday that the country’s crude oil imports in July were down 7% from last year fueled expectations that the economic slowdown affecting the US and Europe may be spreading to Asia and cutting demand for oil.
A stronger dollar is also pushing prices down. The euro fell Tuesday to $1.4879, while the dollar was holding above 110 yen.
A weak dollar helped boost oil prices earlier this year, because dollar-denominated commodities are often used as hedges against inflation and a falling US currency. But gains in the currency are reversing that trend.
In London, Brent crude for September delivery fell 78 cents to $112.04 a barrel.
Prices fell despite concerns that the widening conflict between Russia and Georgia over the breakaway province of South Ossetia could disrupt supplies in the region.
Russian forces pushed a second front deep into Georgia on Tuesday, seizing towns and a military base in the western parts of the country.
Georgian President Mikhail Saakashvili said his country had been effectively cut in half with the capture of the main east-west highway near the central city of Gori.
Nymex crude is down about $33, or 22%, from its high of $147.27 on 11 July.
In other Nymex trading, heating oil futures fell 0.75 cent to $3.112 a gallon (3.8 liters) while gasoline prices dropped 0.61 cent to $2.8605 a gallon. Natural gas futures rose 5.9 cents to $8.408 per 1,000 cubic feet.