Oil prices fell below $113 a barrel Tuesday as a stronger U.S. dollar made crude more expensive for investors with other currencies and markets appraised the impact of Osama bin Laden's death.
By early afternoon in Europe, benchmark crude for June delivery was down 81 cents at $112.71 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 41 cents to settle at $113.52 on Monday.
In London, Brent crude for June delivery was down 99 cents to $124.13 a barrel on the ICE Futures exchange.
Crude has jumped 34 percent since mid-February, a rally fueled by disruption of oil supplies in Libya and a weaker dollar. On days when the dollar strengthens, commodities such as oil tend to fall.
The euro fell to $1.4791 on Tuesday from $1.4823 late Monday.
Traders are also mulling the impact of the death of Osama bin Laden in Pakistan on Sunday. Some are concerned about revenge attacks on U.S. targets while others estimate a weaker al-Qaida lowers the risk that terrorism will destabilize the oil-rich Middle East.
Edward Meir of MF Global in New York said Bin Laden's death doesn't really alter any of the key drivers that have been pushed energy prices higher over the past few months, such as the continued tensions in the Middle East, the stalemate in Libya and the weak dollar.
Some analysts consider bin Laden's death a minor issue for the oil market, and are more focused on U.S. monetary policy. Federal Reserve Chairman Ben Bernanke said last week that the U.S. would keep interest rates low for an extended period, comments that helped weaken the dollar.
"In a number of respects, Ben Bernanke is much more central to the future of oil prices than Osama bin Laden," Cameron Hanover said in a report. "We have seen the impact a weaker U.S. dollar has had on oil prices."
In other Nymex trading in June contracts, heating oil fell 1.55 cents to $3.2366 a gallon and gasoline dropped 0.1 cent to $3.3469 a gallon. Natural gas futures were down 1.4 cents at $4.679 per 1,000 cubic feet.