Oil prices fall on Europe's woes
The price of oil is dropping on fresh concerns about Europe's economy.
Benchmark oil fell US$1.44 on Friday to US$91.53 per barrel in New York. Brent crude, which is used to price international varieties of crude, was down US$1.42 to US$106.38 in London. A decline would be the first after seven straight gains.
The main focus for traders was Spain, where the government predicted that the country's recession will extend into next year and the region of Valencia said it needed help from the central government to pay its bills. But Germany was also a concern as finance officials there said growth in Europe's strongest economy likely slowed somewhat in the second quarter. Meanwhile, in the UK, the government said it had to borrow more than expected last month.
Europe's lengthy battle with a massive government debt crisis has affected industries in other countries, such as the U.S., that do business there. It also has cut demand for oil and other energy products.
Oil had risen about 10 per cent since July 10 on concerns that renewed tensions between the West and Iran could result in a disruption of oil supplies from the Persian Gulf.
"After the long run-up in prices we've had the last 10 days or so, I think (events in Europe) kind of reminded people that the demand picture is still not very rosy," said Michael Lynch, president of Strategic Energy & Economic Research.
Meanwhile, natural gas prices hit the highest level since early January as businesses and consumers cranked up air conditioning systems to stay cool in the hot weather. Natural gas rose three cents to US$3.01 per 1,000 cubic feet.
The price of natural gas fell below US$2 for the first time in more than a decade in April after a production boom boosted inventories. At the same time, a mild winter kept demand in check. The cheaper prices prompted many utilities to switch to natural gas from coal to fuel their generators.
In other energy trading, heating oil fell 3 cents to US$2.91 per gallon and wholesale gasoline prices fell 3 cents to US$2.91 per gallon.