Oil prices slump

The price of oil slumped to its lowest level of the year on Tuesday.

Benchmark US crude lost 97 cents, or 2.2 per cent, to settle at US$43.23 per barrel, and Brent crude, the international standard, fell 89 cents to US$46.02 per barrel.

The price of oil has been sloshing between US$40 and US$55 per barrel for much of the last year, down from a peak of more than US$110 in the summer of 2013.

Drillers have got much better at pulling oil from the ground, which has helped supplies to balloon and correspondingly weighed on prices. Many oil-producing countries have banded together to cut production in hopes of limiting supplies, but analysts are sceptical about how much they can influence prices.

The slump in oil prices weighed on stocks.

The Standard & Poor's 500 index fell 16.43 points, or 0.7 per cent, to 2,437.03, and the Dow Jones industrial average lost 61.85 points, or 0.3 per cent, to 21,467.14. Both the S&P 500 and Dow set records on Monday thanks to big gains from technology stocks.

The Nasdaq composite lost 50.98 points, or 0.8 per cent, to 6,188.03 points.

Losses were widespread across the market, with five stocks dropping on the New York Stock Exchange for every two that rose. Many of the sharpest declines were concentrated in the energy sector, as the price of oil touched its lowest price since mid-November.

One of the main reasons for the stock market's climbing to record after record this year has been the resurgence in profit growth for big companies, and the energy sector is expected to play a leading role in that. Analysts forecast energy companies in the S&P 500 will report better than 300 per cent growth in their earnings per share this year. But if the price of oil keeps dropping, that's at risk.

In other energy prices, natural gas rose a penny to US$2.91 per 1,000 cubic feet and heating oil fell two cents to US$1.39 per gallon.