Oil prices dip below $70

Crude oil prices dropped below $70 a barrel to an eight-week low on Tuesday, after Hurricane Dean weakened and it appeared the storm would have no lasting effect on Mexican oil production.

Gasoline and natural gas prices also extended their sharp losses, with traders betting that demand is falling and supplies are safe.

"It's good news for consumers certainly. There's really not much short-term support for natural gas prices in the absence of hurricane activity," said Tim Evans, energy analyst at Citigroup Global Markets.

Light, sweet crude for September delivery lost $1.65 to settle at $69.47 a barrel on the New York Mercantile Exchange, its lowest close since June 27.

September natural gas, which dropped more than 13 per cent on Monday, fell another 22.3 cents, or 3.7 per cent, to settle at $5.817 per 1,000 cubic feet.

September gasoline futures, which fell 5 per cent Monday, extended its losses by 7.28 cents, or 3.8 per cent, to settle at $1.8637 a gallon. September heating oil futures dipped 2.89 cents to settle at $1.9520 a gallon.

October Brent crude fell $1.16 to $68.69 a barrel on the ICE futures exchange in London.

Wall Street movement

In addition to hurricanes, energy traders are also closely following the stock market's moves.

Wall Street's plunge appears to have been stanched for now, following the Federal Reserve's discount rate cut that made it cheaper for commercial banks to borrow from the central bank. But trading has been choppy, reflecting ongoing credit worries.

Because of the rocky stock market, the energy market is betting that energy demand will keep declining, especially as the driving season ends.

Also causing energy prices to drop, speculators, those looking to make fast money, as opposed to commercial investors who use the market to hedge their interests, have exited their positions to free up cash.