An easing of political tensions in Nigeria and the failure of a technical support level to hold sent crude prices tumbling 3% on the New York Mercantile Exchange Tuesday.
July light sweet crude plummeted $2.05 to $63.15 a barrel, and other energy futures followed. Reformulated gasoline lost 11 cents to close at $2.29 a gallon, and heating oil fell 7 cents to $1.87 a gallon.
June natural gas dropped 5 cents to $7.59 per million British thermal units. The June natural gas contract expired at the close of the session at the Nymex.
Partly responsible for the selloff was word that Nigerian union leaders ordered oil workers back to their jobs Saturday after winning concessions from the country's national oil company. The workers had been on strike since last Thursday. The quick resolution to the strike weighed heavily on oil prices.Crude futures began to fall as soon as trading began in the morning session. As prices fell through support levels, crude's downward momentum picked up steam. "Although the news out of Nigeria was bearish, the collapse in crude prices was not caused by one specific news item," says Tom Bentz, analyst at BNP Paribas Commodity Futures. "The intense selling pressure throughout the day was more technical in nature." Valero (VLO - Get Report), ConocoPhillips (COP - Get Report) and Citgo all restarted refinery units over the weekend. However, the news of the restarts failed to provide support to crude prices, since there is currently an abundance of oil inventories in the U.S., Bentz said.