Oil prices dropped Monday amid continued declines in Asian markets and concerns about the world's economic outlook.
"There's a general sort of recoil from risk in the market," said Tobin Gorey, a commodity strategist with the Commonwealth Bank of Australia in Sydney.
Light, sweet crude for April delivery fell 78 cents to $60.86 a barrel in midmorning Asian electronic trading on the New York Mercantile Exchange.
"There are still ongoing ramifications from China's drop last Tuesday," Gorey said. "It was a jolt to the global economy."
Last Tuesday, the benchmark Shanghai Composite Index plunged 9 percent, triggering huge losses on Wall Street and other global markets. Stock markets in Asia continued their slide Monday, with markets in Japan, the Philippines and India all down sharply.
The oil market has largely shown resilience -- closing at a two-month high on Thursday on the news of tightening gasoline supplies -- but drops on Friday and Monday again showed a link to the stock markets.
Oil prices are supported, however, by expectations for gasoline demand in the U.S. ahead of the peak spring and summer driving seasons. Problems at U.S. refineries have reduced output and cut into petroleum product supplies.
Last week's U.S. inventories report showed stockpiles of gasoline and distillates, which include heating oil and diesel fuel, dropped by a larger amount than analysts had forecast. Meanwhile, demand for products over the last four-week period rose by 7.5 percent from the same period last year.
Tensions between Iran and the United States also remain a bullish factor.
Washington is pushing for tougher U.N. sanctions on Tehran over its failure to comply with demands to halt its uranium enrichment program that the West fears could be used to build a nuclear weapon. Although the United States has said it has no plans to strike Iran militarily, it has also refused to rule out any option.
In other Nymex trading Monday, heating oil futures fell 1.53 cent to $1.7529 a gallon, while natural gas prices rose 0.7 cent to $7.250 per 1,000 cubic feet.
(AP)