Oil prices slide on higher dollar, eurozone concerns

November 17, 2010 | 11:43

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Oil prices sank on Tuesday, weighed down by a strengthening dollar and ongoing concerns over European sovereign debt and inflationary pressures building in China.

New York's main contract, light sweet crude for delivery in December, shed $2.52 to close at $82.34 per barrel.

In London, Brent North Sea crude for December lost $1.97 to settle at $86.70 .

"There are fears about the falling value of the euro against the dollar, leading to a rise in relative oil prices," said Ian Parrett, analyst at British energy consultancy Inenco.

"Fears of rate tightening and slower growth in China will also have a knock-on effect on demand," he added.

The European single currency plunged close to a two-month low under $1.35 on Tuesday as eurozone finance ministers held a crunch meeting in Brussels to address Ireland's debt crisis.

A stronger dollar weighs on demand for dollar-priced oil.

Speculation is building over a possible rescue for Ireland running up to $123 billion (90 billion euros) after Greece was bailed out by the European Union and the International Monetary Fund with 110 billion euros in May.

"Several factors are keeping a lid on oil prices at the moment," said Westhouse Securities analyst David Hart.

"Among these, rising inflation expectations in Asia are increasing concerns that growth in the region will be reined back which would, in turn, moderate increases in crude demand."

Data released last week showed that Chinese consumer prices rose at their fastest pace in more than two years in October, reviving worries that the authorities might hike interest rates again.

AFP

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