Investing.com -- Crude futures fell sharply on Tuesday erasing most of their gains from the previous session, as energy traders shifted their focus away from the Paris terrorist attacks back to longstanding concerns related to the supply glut on global energy markets.
On the New York Mercantile Exchange, WTI crude for December delivery traded in a broad range between $40.61 and $42.09 a barrel, before settling at $40.72, down 1.02 or 2.43% on the session. U.S. crude futures slumped to near 10-week lows on Tuesday after closing down by more than 2% for the fourth time in the last five trading days. Over the last month of trading, Texas Long Sweet futures have crashed by more than 13%, marking the third major downturn in crude prices this year. In late-August, U.S. crude futures fell below $38 a barrel to tumble to a six-and-a-half year low.
On the Intercontinental Exchange (ICE), brent crude for January delivery wavered between $43.51 and $45.10 a barrel, before closing at $43.59, down 0.97 or 2.20% on the day. On Monday, North Sea brent futures fell to $43.15, their lowest level since Aug. 26, before rallying amid a flurry of French airstrikes in Syria.
The Syrian bombing campaign continued on Tuesday, as Russia bombarded Raqqa with sea-launched cruise missiles, U.S. Defense officials told NBC and CBS News. Overnight, the U.S. also intensified its assault against the Islamic State striking more than 100 tanker trucks used to transfer ISIS oil, a U.S. military spokesman told multiple outlets. In addition, France president Francois Hollande announced plans to travel to Moscow and Washington in an effort to build a coalition against ISIS, the Wall Street Journal reported. Over the weekend, ISIS claimed responsibility for the Paris attacks that claimed the lives of more than 120 civilians and wounded at least 350 others.
In Monday's session, crude futures jumped as much as 3.25% as the bombings of ISIS-controlled oil fields disrupted supply in the region. The airstrikes underscore concerns that prolonged fighting between ISIS and several major World powers could threaten global supply on a long-term basis. Market reactions from catastrophic events such as a terrorist attacks or natural disasters, however, are typically viewed by analysts as fleeting before conditions quickly return to normal.
Investors await the release of the American Petroleum Institute's weekly crude stockpile report after the close of trading on Tuesday for further indications on supply levels on U.S. domestic energy markets. Separately, Wednesday's government report could show an inventory build of 1.6 million barrels for the week ending on Nov. 13. Last week, U.S. supply levels increased for the seventh straight week pushing crude inventories near their highest levels in at least 80 years.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged to a fresh seven-month high at 99.83, before falling slightly back in U.S. afternoon trading. Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.