Light crude oil futures trading lower around $69

Light crude oil futures ended trading lower Tuesday, as investor confidence in a quick US economic recovery faltered.

NYMEX light, sweet crude for October delivery settled $1.91, or 2.7%, lower at $68.05 a barrel.

Investors have been increasingly bold in pushing equities and commodities prices to new highs for the year, but they dove back into the safety of the dollar on Tuesday. The trigger came when the Institute for Supply Management reported an expansion in the US manufacturing sector after 18 months of decline, seemingly a sign that industrial activity, and oil demand, are climbing out of their recession lows.

Instead, the news provoked only mild gains, with oil meandering to an intraday high of $71.37 a barrel - well below the 2009 high of $75 a barrel hit Aug. 25. The Dow Jones Industrial Average similarly fell short of its high for the year.

Stocks quickly plunged, and oil followed. The dollar, considered a "safe haven" investment when the economic outlook is bleak, surged against other major currencies.

"Everything bounced ... and that bounce failed," said Tom Bentz, a broker and analyst with BNP Paribas Commodity Futures Inc. "We took out the support [below $70 a barrel], and that's saying that the market is showing signs that maybe this thing wants to continue working lower."

Oil prices have struggled to reach and hold $75 a barrel, as promising indicators such as the ISM manufacturing index haven't been reflected in the oil market, where demand is struggling to match even last year's weakened level.