Singapore: Oil fell below $74 a barrel on Tuesday in a drop on broader global stock markets from 10 month highs hit in the previous session.
US crude fell 51 cents to $73.86 a barrel by 1:34pm. On Monday, it settled at $74.37 after hitting $74.81, the highest closing and intraday prices since mid-October.
Brent crude was down 67 cents at $73.59.
“The drop is probably due to the decline in equities markets today,” said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.
Commodities markets have closely tracked equities indexes in recent months, as dealers view stocks as a lead indicator of economic performance, which would boost or reduce energy and commodities demand.
European shares fell in early trade from their 10 month highs struck on Monday.
Asian shares slid, led by China as investors awaited more clues for sustained economic recovery.
The Shanghai stock index plunged more than 5% after Premier Wen Jiabao said Beijing would keep its monetary policy loose as the economy faces new difficulties, including trouble boosting domestic consumption.
Global investors will watch US housing, consumer confidence and retail sales data due later on Tuesday as pointers to the health of the world’s biggest economy. and largest energy consumer.
The oil market’s focus will shift to weekly oil data on inventories in the United States.
Analysts in a Reuters survey forecast a 900,000 barrel drop in US crude inventories. Gasoline inventories were forecast for a drop, while middle distillate stocks, including heating oil, were seen increasing.
Last week’s data showed a large fall and the crude inventories on week-on-week basis and the level dipped below a year earlier.
Data from the industry body the American Petroleum Institute will be released at 2:00am on Tuesday, while the equivalent US government data is due out on Wednesday.