Energy prices tumbled Tuesday as investors flocked to the US dollar as a haven in the wake of the growing nuclear crisis in Japan.
Analysts think oil prices will continue to fall as Japan struggles, perhaps for months, to recover from widespread damage caused by Friday's earthquake and tsunami.
More than 10,000 people are thought to have died in the disaster. Dangerous levels of radiation have been reported leaking from a crippled nuclear plant in northeastern Japan.
Benchmark West Texas Intermediate crude for April delivery dropped $3.40, about 3.4 per cent, to $97.79 per barrel in morning trading on the New York Mercantile Exchange. In London, Brent crude lost $4.29, almost four per cent, to $109.38 per barrel on the ICE Futures exchange.
Prices are still well above what they were in the middle of February, when uprisings in Libya shut down that country's oil production. Wall Street analysts said they expected that Japan's crisis would eventually force it to boost imports of coal, natural gas and oil.
Meanwhile, the US Dollar Index, which tracks the greenback versus other major currencies, rose nearly one per cent.
Investors were likely buying the dollar because of its relative safety as the Japanese disaster raises concerns about the future of the world's third-largest oil consumer and the nuclear energy industry in general, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
Oil, which is priced in dollars, tends to fall as the dollar rises and makes crude barrels more expensive for anyone holding foreign currency.
After a rise in oil prices like the world saw this month "we were due for a sinkhole day like this," Kloza said.
Kloza said Japan's economy probably will be hobbled for the next few months, and that will cut further into energy demand. That means oil prices should fall even further.
"You've got one of the cylinders in global growth that has slowed down, at least for now," he said.
In other Nymex trading for April contracts, heating oil fell 10 cents, or 3.4 per cent, to $2.9614 per gallon and gasoline futures fell 15 cents or 5.1 per cent to $2.8100 per gallon. Natural gas lost a penny at $3.903 per 1,000 cubic feet.