The following is part of our series wading through the economic jargon, Crunching Numbers.

Global Petroleum Demand (from the Department of Energy)

Oil futures on the New York Mercantile Exchange, a key indicator of oil prices people will pay for, dropped 1.4 percent from Monday settling at $95.29 a barrel Tuesday. It once plunged more than $3 in less than a minute Monday.

The drop came over concerns of an economic slowdown, possible shaky performance of the euro, and the uncertainty in the Middle East, said Tim Evans, an energy futures analyst at Citigroup.

“As one context, we should examine how the market has responded to a new round of quantitative easing,” Evans said. “The market has basically disappointed.”

The Federal Reserve announced last Thursday the third round of quantitative easing, which will inject more money into the economy and is supposed to accelerate the economic recovery. 

Most market watchers had been expecting that the QE3 will drive up the prices of dollar-denominated oil, however, oil was seeing limited gains last Thursday and Friday.

“Investors are largely unprepared for bearish news,” said Evans. 

The quantitative easing that decreases the value of dollar will not necessarily lead to higher oil prices, said Tancred Lidderdale, the supervisor of the short-term energy outlook team for Energy Information Administration. 

“Weakening dollar could lead to higher oil prices, it will also contribute to lower oil prices,” said Lidderdale.

Globally the lower dollar means cheaper oil for countries with appreciating currencies, said Lidderdale.

FedEx, regarded as an indicator of U.S. economy, cut its forecasts for global and U.S. economic growth next year adding to anxiety of the global economy.

Also, Spain announced that it will consider a bailout if conditions are acceptable, after the Bank of Spain reported an increase in bad loans.

Evans said if OPEC maintains the production level in August, 31.2 million barrels a day, the oil prices will continue to going down in the fourth quarter. Because there will be an oversupply of 650,000 barrels a day pushing up inventories.

But oil price decrease could benefit consumer spending, according to Evans. 

“What can happen is that the drop in fuel cost could allow consumer more dispensable expenditure, probably on food, clothing, or to pay off debt,” said Evans. 

The consumer price index, an indicator of changes in retail prices, increased 0.6 percent.

“But 80 percent of the increase is on energy,” said Evans.

He projected with the oil prices going down, the CPI of September will stay roughly flat. But consumers will have more to spend on other products rather than gasoline.

Read more from Neon Tommy's Crunching Numbers series here.

Reach Staff Reporter Kay Chinn here.