Prices hit an intraday seven-week high on Monday, before
ending lower after forecasts indicated that Tropical Storm Alex would skirt the
Gulf of Mexico's main production centers.
At 12:50 p.m. (1650 GMT), US crude for August was down
$2.55, or 3.26 percent, at $75.70, having tumbled as low as $75.28 per barrel.
ICE Brent crude fell $2.34 to $75.25.
"It is a return to risk aversion," said Eugen
Weinberg, a commodity analyst at Commerzbank in Frankfurt. "Gold is
outperforming other commodities, a sign of a move to safe havens, and base
metals are down on worries over the economy."
"The oil market is no longer worried about Tropical
Storm Alex as it looks like it will avoid oil facilities."
Oil declined along with equities and the euro on concerns
about whether Europe's banks can repay 442 billion euros ($545.5 billion) to
the European Central Bank.
Adding to concerns about economic growth and demand for oil,
the Conference Board corrected its leading economic index for China to a 0.3
percent gain in April rather than the 1.7 percent rise earlier reported.
The dollar's strength added pressure to the commodities
complex. A stronger dollar often weighs on commodity markets, but that
correlation has proved erratic this year.
On Tuesday, the Reuters-Jefferies CRB index, a global
commodities benchmark, fell to a two-week low.
