Oil traders are balancing out concerns of diminished expectations for growth in Europe given the ongoing debt crisis that resulted in a financial bailout for Ireland this week and indications China is considering policy adjustments to slow inflation.
The European Commission said Monday that growth in Europe was expected to be "muted" through 2012 with the gross domestic product gaining 1.75 percent in 2011 and 2 percent in 2012.
Of more immediate concern is Portugal and Spain. With Ireland accepting $90 billion in international aid, jittery investors could back away further from bond markets in Europe, increasing the cost of financing in recession-weary countries.
January delivery crude oil in New York on Tuesday dropped $1.92 to $83.81 per barrel. Heating oil prices lost 6.1 cents to $2.3193 per gallon. Reformulated blendstock gasoline shed 3.27 cents to $2.1917 per gallon.
Henry Hub natural gas prices added 1.4 cents to $4.21 per million British thermal units.
At the pump, the national average price of unleaded gasoline dropped to $2.854 per gallon from Monday's $2.857, AAA said.
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