Crude futures plunged Tuesday on a strengthening dollar after U.S. Federal Reserve Chairman Ben Bernanke said more rate cuts are unlikely.
Light, sweet crude for July delivery dropped 3.45 U.S. dollars to settle at 124.31 dollars a barrel on the New York Mercantile Exchange, lowest settle price since May 15. Crude prices continued to fall below 124 dollars a barrel in the after-hour electronic trading.
Bernanke indicated in a speech on Tuesday that further rate cuts are unlikely, which immediately shored up the dollar against the euro and other major currencies. Many investors who have bought oil as a hedge against inflation sold on Bernanke's comment.
The U.S. Senate Commerce Committee held a hearing Tuesday, trying to find out the prime mover behind the rising oil prices which hit a all-time peak of 135.09 dollars a barrel on May 22. The billionaire hedge fund manager George Soros told the committee that oil prices show signs of a bubble, but have "strong fundamental factors."
In London, Brent crude for July delivery fell 3.44 dollars to 124.58 dollars a barrel on the ICE Futures Exchange.