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Oil plunges on strong dollar, profit taking

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World oil prices sank in volatile year-end deals on Wednesday, as traders took profits and eyed the strong dollar, new concerns over the eurozone debt crisis and fresh equity falls on Wall Street.

New York’s main contract, light sweet crude for February delivery, known as West Texas Intermediate (WTI), sank $1.98 to $99.36 a barrel.

Brent North Sea crude for February dived $2.16 to $107.11 in volatile late afternoon London trade, ahead of the New Year holiday break.

The European single currency tumbled on Wednesday close to a one-year low, as investors fretted over the eurozone crisis on the eve of Italy’s second bond auctionwithin just two days.

In late afternoon deals, the euro slumped to $1.2941 — which was the lowest point since January 11. It later pulled back slightly.

The stronger greenback makes dollar-denominated crude more expensive for buyers using weaker currencies, like the euro, and this tends to dampen oil demand and prices.

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