The price of crude and other energy products retreated Tuesday as fears about the global economy resurfaced following reports that European banks may have more risky government debt on their books than previously thought.
Benchmark crude for October delivery fell $1.25 to $73.35 a barrel in midday trading on the New York Mercantile Exchange.
The Wall Street Journal reported that EU stress tests of 91 banks in July understated some lenders' holdings of potentially risky debt. The Financial Times said Germany's top 10 banks will have to raise as much as $135 billion to meet new capital requirements.
In addition, abundant supplies of oil will pull prices down over the next two months, with fewer U.S. drivers on the road and the winter heating season still to come, MF Global analyst Andrew Lebow said.
The dollar's surge against the euro also was a factor in pushing down oil prices by making crude more expensive for investors trading in the weakening currencies.
The euro fell to $1.2753 Tuesday morning from $1.2877 late Monday in New York, while the British pound slumped to $1.5319 from $1.5399.
Oil has mostly traded in the mid-$70s this summer as investors struggle to gauge how much global economic growth may slow in the second half and how much that will affect crude demand. Most analysts expect the U.S. economy won't slip back into recession.
Crude prices were also under pressure from the lack of production disruptions in the Gulf of Mexico due to the weaker-than-expected hurricane season
In other Nymex trading in October contracts, heating oil fell 1.34 cents to $2.0439 a gallon, gasoline dropped 2.56 cents to $1.8839 a gallon and natural gas lost 5.5 cents to $3.884 per 1,000 cubic feet.
In London, Brent crude slipped down 49 cents at $76.38 on the ICE Futures exchange.
