Oil prices plunged with the equity markets Monday as investors nervous about a week chock full of corporate earnings reports sought safer havens in gold and the dollar.

Benchmark crude for May delivery fell $4 US to $46.33 a barrel on the New York Mercantile Exchange. Oil began its slide after the Dow Jones industrials opened with triple-digit losses.

Phil Flynn, an analyst at Alaron Trading Corp., said the oil markets are reacting to weakness in the stock markets and strength in the dollar.

"This is a market that is totally dependent on these two markets right now for direction," Flynn said. "We don't move on supply. We don't move on demand. We just move on the dollar.

"And wherever the dollar is or the stock markets is, that's where we have a tendency to end up with the oil."

The Dow was down around 200 points Monday morning despite a surprisingly strong profit report from Bank of America Corp., and Oracle Corp.'s announcement that it plans to acquire Sun Microsystems Inc. for $7.4 billion.

Stock markets have jumped more than 20 percent in the last six weeks on expectations that massive global stimulus packages will spark a recovery by the end of the year.

But both markets are due for a reality check this week — among the hundreds of companies due to report are 3M Co., Boeing Co., Coca-Cola Co., DuPont, IBM Corp., McDonald's Corp., Merck & Co. and Microsoft Corp.

"You don't normally think of earnings and oil all the time in the same sentence, but it's probably going to be a major factor," Flynn said.

'Less bad is good'

On Thursday and Friday, investors will get figures on U.S. sales of existing and new homes in March. The Commerce Department is also due to release March orders for durable goods — manufactured products with a lifespan of three years or more.

Oil prices have hovered around $50 a barrel this month, after dropping below $35 in February, as investors look for signs of the economy's direction in the second half of the year.

Trader and analyst Stephen Schork described the recent rationale for buying oil as "less bad is good."

"That is to say, the global economy continues to sputter along, but it is doing so at a slightly faster pace. Be that as it may, it is still sputtering ... and that is bad," he wrote in his Schork Report. "Telltales still exist that suggest that economies in every corner of the globe are far from turning the proverbial corner."

OPEC production cuts have helped support prices this year. The Organization of Petroleum Exporting Countries, which next meets on May 28, has announced output quota reductions of 4.2 million barrels a day since September.