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Oil tumbles below $77 as hurricane fears ease

Oil prices tumbled below $77 a barrel Tuesday on signs Tropical
Storm Alex would likely miss most of the rigs in the Gulf of
Mexico, leaving supplies undisrupted, and as the dollar made strong
gains against the euro.
By early afternoon in Europe, benchmark crude for August
delivery was down $1.54 to $76.71 a barrel in electronic trading on
the New York Mercantile Exchange. The contract fell 61 cents to
settle at $78.25 on Monday.
Alex gained strength and appeared on track to become a hurricane
Tuesday before it makes landfall very near the Mexico-U.S. border
sometime late Wednesday, said the U.S. National Hurricane Center in
Miami, Florida.
The tropical storm's center wasn't expected to approach BP's
massive oil spill off Louisiana's coast or the other major crude
installations in the area, the center said.
Crude prices jumped late last week on expectations Alex could
disrupt Gulf oil supplies.
"On Friday, the storm was something of a blank canvas with
nothing on it, and traders were quick to project their worst
fears," Cameron Hanover said in a report. "But, by Monday, it was
clear that this first storm of the 2010 Atlantic hurricane season
was not going to be a major threat to the oil industry."
All major European and Asian stock markets fell Tuesday, which
also undermined overall investor confidence.
"It is possible that the energy market will receive further
pressure in the near-term, following the general negative sentiment
in the global equity markets as renewed concerns over the (euro
zone's) sovereign debt problems continue to dominate the markets
and put risk appetite off the board," said a report from analysts
at Sucden Financial in London.
Also weighing on oil prices was the dollar's renewed strength
against the euro and the British pound, making crude more expensive
for investors holding those European currencies.
The euro fell to $1.2192 in afternoon European trading from
$1.2287 late Monday in New York, while the British pound declined
to $1.5061 from $1.5110.
In other Nymex trading in July contracts, heating oil fell 4.18
cents to $2.0515 a gallon, gasoline dropped 4.16 cents to $2.0960 a
gallon and natural gas was down 0.7 cent at $4.726 per 1,000 cubic
feet.
In London, Brent crude was down $1.47 to $76.12 a barrel on the
ICE Futures exchange.
---
Associated Press writer Alex Kennedy in Singapore contributed to
this report.

(Copyright 2010 by The Associated Press. All Rights Reserved.)


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