THE CANADIAN PRESS -- LONDON - Oil prices fell to near US$94 a barrel on Tuesday as financial markets were hit by worries about Europe's debt crisis and the U.S. dollar strengthened, making commodities like crude more expensive for international investors.
Benchmark oil for August delivery was down $1.05 to $94.10 a barrel at late morning European time in electronic trading on the New York Mercantile Exchange. Crude fell $1.05 to settle at $95.15 on Monday.
In London, Brent crude fell $1.54 to $115.70 per barrel on the ICE Futures exchange.
Markets have been shaken by concerns that the debt crisis could spread to Italy and Spain, the third and fourth largest economies in Europe. On Monday, European officials disagreed over a second bailout package for Greece.
"The focus has shifted from Greece to Italy, and it seems that one of the southern European countries is going to pose a problem," Cameron Hanover said.
The euro fell to $1.3943 on Tuesday from $1.4048 late Monday.
"The dollar may be getting ready to rally over an extended period," Cameron Hanover said in a report. "The bigger question is whether the oil market will follow the euro, as it has done for most of the last four years or so."
Meanwhile, markets are awaiting information on the level of U.S. stockpiles of crude and refined products.
Data for the week ending July 1 is expected to show a draw of 2.5 million barrels in crude oil stocks and a rise of 500,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration -- the market benchmark -- will be out on Wednesday.
In other Nymex trading in August contracts, heating oil fell 3 cents to $3.06 a gallon while gasoline dropped 3 cents to $3.04 a gallon. Natural gas futures slid 0.7 cent to $4.21 per 1,000 cubic feet.