Prices were under pressure after the euro plummeted, making dollar-priced oil more expensive and dampening demand.
New York’s main contract, West Texas Intermediate crude for delivery in July was down 42 cents to $90.34 per barrel while Brent North Sea crude for July shed 30 cents to $106.38 in the afternoon.
“Spain remains the key worry for the eurozone debt crisis, eclipsing optimism in Greece that the pro-bailout conservatives are leading the polls ahead of next month’s election,” said analysts from DBS Bank in a commentary.
“As far as the eurozone crisis is concerned, the market does not see the light at the end of the tunnel,” they added.
The Spanish government on Tuesday announced new bonds to finance debt-struck regions. As banks scrambled to clean up bad loans, investors feared the country may be inching closer towards seeking international aid.
Across the Atlantic, analysts forecast US crude inventories to remain at the highest level for this time of the year in 22 years, indicating faltering demand in the world’s largest oil-consuming economy.
Early forecasts call for US crude stocks to drop by 400,000 barrels after rising by more than 35.4 million barrels over the past eight straight weeks, Dow Jones Newswires said.
“As US stockpiles hit their highest level for more than 20 years, confidence is falling off a cliff,” said Justin Harper, market strategist at IG Markets Singapore.
Weekly oil inventory data from the US Energy Information Administration is expected to be released Thursday, a day later than usual due to the Memorial Day Holiday celebrated Monday.