Crude Down Roughly 2% in Volatile Trade

Crude oil spent a good part of Tuesday's trading session in positive territory, but a steep afternoon sell-off has sent the price of NYMEX crude down to $106.65, a loss of around 2%. The low of the session was at $106.30 and if that level is broken to the downside, we could see more pressure on crude prices in the electronic trading session. The market remains very volatile in the wake of persistent gains sparked by intensifying tensions in the Middle East. In ETF trading, the United States Oil Fund ETF USO has fallen around 1% to $40.79 with less than an hour to go in the trading day. Last Friday, NYMEX crude futures hit a high of $109.95. The situation is being watched very closely by financial market participants due to the potential effect that rising prices could have on the global economy. Along with the risks posed by the European debt crisis, runaway oil prices are the number one near-term risk to the economy and potentially the world's financial markets. A further significant spike in crude oil is a possibility at any time, and with prices continuing to hold over $100, such an event would likely trigger a sharp pullback in other risk assets.