By Nick Godt, MarketWatch
NEW YORK (MarketWatch) -- Crude oil futures fell in synch with stocks on Tuesday, as U.S. traders returned from a long holiday weekend to be met by concerns over European banks and economic growth.
Crude oil for October delivery fell $1.37, or 1.9%, to $73.22 a barrel at the New York Mercantile Exchange.
In Europe, banking stocks came under pressure as regulators met in Basel to finalize new global rules on capital requirements and after The Wall Street Journal reported that the region's recent stress tests underestimated some lenders' holdings of government debt. See full story on the stress tests.
U.S. stocks opened lower, with the Dow Jones Industrial Average (DJIA 10,367, -81.05, -0.78%) off 33 points.
Adding to concerns about economic growth, Germany's manufacturing orders dropped 2.2% in July from the previous month, the economics ministry reported on Tuesday. Economists expected a rise of 0.5% month-on-month, according to Action Economics.
Last week, crude oil lost nearly 1%, even after better-than-expected news on U.S. employment.
Gold Or Bonds. Or Both?
Both gold and high quality sovereign bonds have performed well since the financial crisis. Normally bonds do well in deflation and gold in high inflation. So why are both going up? That's because the most likely outcome is one or the other rather than something inbetween.
"With jobs still far from a pace that will get us back to normal I don't think that there is reason to celebrate," said Phil Flynn, energy analyst at PFGBest, in a note. "I think the market may slip into a negative mode."
Retail gasoline prices were already falling heading into Labor Day weekend to reach their second weakest price of the past five summer driving seasons, Flynn said.
But even with lower prices, he expects demand for gasoline stayed weak over the long weekend because of the Atlantic storms hitting the East Coast.
