SINGAPORE: Brent crude oil fell more than $1 to below $108 per barrel on Tuesday on concerns over the health of the euro zone economy and as Kuwaiti oil exports resumed after a strike by the country's customs union.
European shares fell while the dollar rose as markets awaited a vote by Slovakia's parliament to ratify an expansion of the euro zone's financial rescue fund.
Brent futures for November fell $1.39 to a low of $107.56 before recovering slightly to trade around $107.75 by 0900 GMT.
US November crude oil futures dipped to a low of $84.27, down $1.14 before inching back up to around $84.40. Both contracts jumped nearly 3 percent on Monday.
The euro eased 0.1 percent against the dollar as optimism over a new plan to tackle the euro zone debt crisis evaporated.
Financial markets are deeply sceptical over the chances of success of a financial package to be put together by France and Germany to stem the euro zone debt crisis, help Greece and recapitalise European banks.
"The last few days have seen a relief rally on hopes that policy makers would do something radical to sort out the euro zone debt mess," said Standard Bank oil analyst James Zhang.
"But optimism is fading and there is a feeling that the problem may not be properly addressed and profit-taking has kicked in," Zhang said.
KUWAIT
Investors remain cautious due to the lack of detail about the Franco-German plan and worry it could be derailed by political deadlock in Slovakia, the one euro country that has yet to approve the EFSF expansion.
Traders were closely watching oil exports from Kuwait, one of OPEC's top five producers, after a strike by a customs union shut ports and halted vessel traffic on Monday.
A spokesman for the country's oil sector said on Tuesday exports of crude and oil products were moving normally from Kuwaiti ports, but it was not clear whether there would be any further disruption of cargo movements.
Kuwait accounted for about 7.7 percent of the Organization of the Petroleum Exporting Countries' overall crude output in 2010, Reuters data showed.
Investors were also keeping an eye on oil inventories in the United States for demand cues in the world's largest consumer. US commercial crude stockpiles probably rose last week as imports rebounded and refinery runs fell, a preliminary Reuters poll of analysts found on Monday.
Refinery capacity utilisation was forecast to have slipped for a third week, with analysts expecting runs to have fallen by 0.85 percentage point last week.
The decline is expected to come as some plants take units offline for maintenance between the end of the summer driving season and the rise in winter demand for heating oil.
Copyright Reuters, 2011
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