Oil Price Falls On Concerns About Global Economy

Texas_120711_1.jpg
Associated Press + More

By CHRIS KAHN, Associated Press

NEW YORK (AP) — The price of oil has been on a bumpy ride, changing direction almost every day this month as the economy sputtered along.

Investors and analysts say it's hard to figure where prices are headed. China and other emerging economies appear to need more oil. Yet those increases are offset by weaker demand in the U.S. — the world's biggest oil consumer — where the job market has stagnated, and in Europe, which continues to wrestle with massive government debts.

"The market seems kind of directionless," Gene McGillian, a broker and oil analyst at Tradition Energy, said. "Are we going to see the emergence of a global economic recession, or are things going to stabilize?"

[READ: Neglect, Inaction Caused Michigan Oil Spill.]

The latest batch of data continued to deliver mixed views of the global economy.

Reports out of Europe Thursday said borrowing costs rose in Spain and unemployment rose in Greece, stoking concerns about the region's financial crisis. Meanwhile the U.S. Labor Department said the number of people filing for unemployment benefits plunged last week. Economists said they thought the drop will be temporary.

The International Energy Agency said global oil demand should rise this year, but the increase will be less than what it predicted a month ago.

Benchmark U.S. crude fell by 81 cents to $85 per barrel in New York, while Brent crude lost 33 cents to $99.90 per barrel in London.

Natural gas futures dropped nearly 2 percent after the government said U.S. supplies grew more than expected last week. The Energy Information Administration said the nation's supply is nearly 20 percent higher than the five-year average.

The price of natural gas fell by 3 cents to $2.81 per 1,000 cubic feet in New York.

[PHOTOS: The 2012 U.S. Olympic Trials.]

At the pump, retail gasoline prices were flat at a national average of $3.384 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline prices have been steady this week. A gallon of regular is about 55 cents cheaper than what it was in April.

In other futures trading, heating oil lost 2 cents to $2.74 per gallon, while wholesale gasoline added nearly a penny to $2.77 per gallon.

___

Follow Chris Kahn on Twitter at http://twitter.com/ChrisKahnAP

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.