SINGAPORE—Oil tumbled in Asian trade Friday due to a stronger dollar as global financial markets remained on edge on worries over the struggling US economy and the European debt crisis.
Analysts said prices are expected to be volatile, mirroring developments in the financial markets and the global economy.
New York’s main contract, West Texas Intermediate light sweet crude for delivery in September, fell $1.03 to $84.69 per barrel in the afternoon.
Brent North Sea crude for September delivery dipped 57 cents to $107.45.
“The US dollar has strengthened and that puts some downward pressure on oil, but this is part of the volatility of the markets,” said Victor Shum, an analyst with Purvin and Gertz energy consultancy in Singapore.
A stronger dollar makes dollar-priced oil more expensive, leading to softer demand and pushing prices lower.
Shum added that oil price movements will largely be “dependent on headlines”, referring to news that can influence investors’ behavior.
Crude prices fluctuated sharply in US trade on Thursday before following stock markets higher as bargain hunting and less bearish economic outlooks took hold in the markets.
“Growth concerns have pinned back oil prices at six-month lows, but current market turmoil distracts from supportive market fundamentals,” said Lawrence Eagles of JPMorgan Chase.
“However, with future economic growth becoming a central concern, we consider the implications for demand and supply if growth downgrades continue and what lessons, if any, the recession of 2008 provides,” he said in a client note.