By Claudia Assis and William L. Watts, MarketWatch
SAN FRANCISCO (MarketWatch) — U.S. crude-oil futures lost ground Tuesday alongside U.S. equities and other commodities on renewed concern about a slowdown in China.
Crude-oil futures for April delivery CLJ2 -1.77% fell $1.69, or 1.6%, to $106.37 a barrel on the New York Mercantile Exchange.
Futures ended Monday’s session at their highest level in more than two weeks, boosted by optimism over the global economic outlook and a weaker dollar.
Some of the decline was also a reaction to fears that China is slowing down. An executive from mining giant BHP Billiton Ltd. BHP -3.27% UK:BLT -3.91% warned that demand for iron ore from China will flatten out as the world’s second-largest economy cools. Read more on BHP.
U.S. stocks opened lower on the news, with the Dow Jones Industrial average off nearly 100 points recently. Gold and other metals futures fell. Read about metals action.
A higher dollar also kept oil prices lower.
The dollar index DXY +0.10% , which measures the U.S. unit against a basket of major rivals, traded at 79.529, compared to 79.451 in late North American trading Monday.
A stronger dollar is a negative for dollar-denominated commodities such as oil and metals.
Meanwhile, Saudi Arabia, the world’s largest oil exporter, said Monday it would work alone and in cooperation with other producers to ensure adequate global supplies of crude oil, market stability and fair prices, Dow Jones Newswires reported.
Traders also parsed out news China has raised pump prices for diesel and gasoline, seen as leading to higher crude prices worldwide.
“This makes it more lucrative for the country’s refineries to process crude oil, which should be reflected in higher crude imports and thus lend support to oil prices,” analysts at Commerzbank said in a note to clients Tuesday.
“That said, it is also likely to reduce domestic demand for gasoline and diesel,” they said. Fuel retail prices in China are 20% higher than in the U.S. and 50% higher than three years ago, the analysts said. “Consequently, China may export more oil products, thus generating pressure on international refinery margins,” the Commerzbank analysts added.
April gasoline RBJ2 -0.81% was off 3 cents, or 0.8%, to $3.34 a gallon. April heating oil HOJ2 -1.43% declined 5 cents, or 1.4%, to $3.22 a gallon.
Traders on Tuesday will be watching for weekly reports from the American Petroleum Institute followed by more closely watched U.S. Energy Information Administration data on Wednesday.
Analysts polled by Platts forecast a 2.1 million barrel build in U.S. commercial crude inventories for the week ended March 16.
