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Oil prices fell on Tuesday as economic concerns sent investors into safer havens, outweighing positive U.S. manufacturing and home sales data.

U.S. crude for October delivery settled $1.91 lower to $68.05.

Stocks dropped as investors confidence in the economic recovery wavered.

Meanwhile, the dollar rose as the slide in stocks boosted the currency’s safe-haven appeal.

"The dollar is strengthening and equities are coming off hard so (oil futures) did the same," said Tom Knight, trader at Truman Arnold in Texarkana, Texas.

Oil futures had risen earlier in the day as the market focused on a report showing a jump in manufacturing and pending home sales.

"It looks like the whole complex is failing to sustain the gains … basically, the markets not done yet on the downside," said Tom Bentz, senior commodity analyst, BNP Paribas Commodity Futures Inc. in New York.

Oil has risen from a low of $32.40 in December, helped by economic recovery optimism that lifted global stocks to 10-month highs last month.

Oil traders will look for fresh direction from U.S. weekly crude stockpiles data.

Analysts expect the data to show a 400,000-barrel fall in U.S. crude stocks following an increase in refinery utilization, a preliminary Reuters poll of analysts showed.

The American Petroleum Institute (API) will release its weekly inventory report at 4:30 p.m. ET on Tuesday. The Energy Information Administration (EIA) will release its data on Wednesday at 10:30 a.m. ET.

Adding to already high inventories, OPEC has reduced its compliance with agreed production curbs, a Reuters survey on Tuesday found.

OPEC supply in August rose for a fourth consecutive month as Saudi Arabia, Nigeria and Venezuela increased their production, taking overall output discipline to 68% from a revised 70% in July.

The Organization of the Petroleum Exporting Countries meets on Sept. 9 in Vienna to reconsider its output policy. 

Source