Oil drops below $69 as dollar gains, stocks slide

Oil prices dropped below $69 a barrel Monday, hurt by a rise in the U.S. dollar, which tends to weigh on commodities, and a slide in regional stock markets.
By midday in Europe, Benchmark crude for October delivery was down 59 cents to $68.70 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract tumbled $2.65 to settle at $69.29.
Oil prices have fallen about $4 in the last two trading days as the dollar rebounded off its lows of the year last week. Oil is priced in dollars so it becomes more expensive when the U.S. currency gains.
The euro fell Monday to $1.4538 from $1.4594 on Friday, the British pound fell to $1.6539 from $1.6687 and the dollar rose to 90.80 Japanese yen from 90.57 yen.
Oil traders are also eyeing stock markets for an overall reading of investor confidence. Most Asian and European indexes fell Monday.
"Oil's being driven down by the dollar and weakness in Asian stocks," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "There are also worries about oil demand."
Crude has traded between $65 and $75 for the last few months as investors seek to understand how far consumer demand can recover as the global economy stabilizes.
Shum said oil will likely remain in that range until there is a strong new catalyst.
"There are no clear forces to cause oil to break out of that range," Shum said. "I don't expect this pullback to be very significant."
Britain's KBC Market Services concurred, but warned that "if the improved economic mood doesn't last then a major correction could happen very fast."
In other Nymex trading, gasoline for October delivery fell 1.87 cents to $1.7411 a gallon, and heating oil dropped 0.83 cents to $1.7225 a gallon. Natural gas rose 5.4 cents to $3.014 per 1,000 cubic feet.
In London, Brent crude was down 37 cents to $67.32 on the ICE Futures exchange.