NEW YORK (
) -- Energy prices suffered as an overwhelming aversion to risk overtook markets Tuesday following a steep downward revision to an economic indicator for China and a weak U.S. consumer confidence reading.
Markets got off to a bad start Tuesday after the Conference Board chopped its read on China's leading economic indicators because of a calculating error, according to
, saying April saw a 0.3% uptick rather than the 1.7% rise reported earlier. The China news roiled crude prices, in particular, since the nation ingests more oil than any other besides the U.S.
Economic concerns were amplified after the
Consumer Confidence Index in the U.S. plunged to 52.9 this month from 62.7 in May.
Additionally pressuring dollar-priced commodities was a
stronger U.S. dollar, which rose 0.5% against a basket of currencies, according to the dollar index. Earlier, the euro hit a two-week low against the greenback as questions mounted whether eurozone banks would be able to repay a massive debt load to the European Central Bank by Thursday.
The August delivery crude contract on the Nymex lost $2.31, or 3%, to settle at $75.94 a barrel, which wasn't too far from its lowest level of the session at $75.28.
"It looks as if the disappointing data is unraveling things right now," said Gene McGillian, analyst at Tradition Energy, who said today's slump suggests market strength was built more on perception rather than fundamentals. "My expectation is that the market has some further losses in front, if not today than as we enter the next round of inventory reports ... I expect the next few weeks we'll be ranging pretty broadly between $70 and $80 a barrel, but I don't see signs that we can push through $80."
At 4:30 p.m., the American Petroleum Institute reported a 3.4 million-barrel decline in crude oil inventories in the week ended June 25, which was better than the drop of 1.2 million barrels that analysts polled by Platts have been anticipating.
The government's weekly supply report will be released at 10:30 a.m. ET on Wednesday.
Energy-related stocks slumped alongside the equity market although capital goods and basic materials sectors showed the worst performance. The NYSE Arca Oil index shed 2.8% and the Philadelphia Oil Service Sector index lost 4.2%. The
U.S. Oil Fund
exchange-traded fund finished the session down by $1.04, or 3%, at $34.17.
Dow Jones Industrial Average
lost 268 points, or 2.7%, to close below the 10,000 level and integrated energy components
finished 2% and 2.3% lower, respectively.
Continued uncertainty regarding the potential damage of
tropical storm Alex , which is expected to get upgraded to Hurricane Alex, may have helped put a floor under energy prices although most reports suggest the storm won't have as much of an impact on energy production as previously thought.
However, the storm did force a temporary suspension of
oil spill cleanup efforts. The stock gained 2.3% Tuesday.
Other Nymex energy futures lost ground as well. The August heating oil contract shed 7 cents, or 3.2%, to settle at $2.05 a gallon. August gasoline also gave up 7 cents, or 3.1%, to settle at $2.07 a gallon. Natural gas for August delivery declined by 19 cents, or 3.9%, to settle at $4.55 per million British thermal units.
--Written by Sung Moss and Melinda Peer in New York