World oil prices tumbled to their lowest in more than two years on Tuesday, with U.S. crude posting its biggest daily decline since 2012 as expiring October gasoline futures tumbled 4.5 percent and the U.S. dollar rose.
New York RBOB gasoline for October delivery, which expires at the end of the day, reversed more than half of its gains from a two-week rally that traders had attributed to a short squeeze on local supplies.
That selloff contributed to a more than $3 slump in U.S. crude and deepened losses in European benchmark Brent, both of which tumbled abruptly at midday. Brent was set for its biggest quarterly fall in two years, down 16 percent.
Many brokers said oil prices were also pressured by the U.S. dollar's surge to a four-year high against a basket of currencies, and a two-year high against the euro. Oil traders said other factors that may have contributed to the decline included end-quarter position squaring by funds or further possible oil hedging from Mexico.
Brent crude for November delivery was down nearly $3 to under $95 per barrel. It has lost nearly 14 percent in the third quarter, its biggest quarterly drop since April-June 2012. U.S. crude, pressured by lackluster economic data, swooned by $3.41 to end at $91.16 a barrel. The contract dropped more than 3 percent, its worst one-day slide since November 2012.