NEW YORK, United States — Oil prices can’t find a leg to stand on.

Many of the key factors that drove oil to three-year highs in May — fears of growing Middle East tensions, rising Chinese demand, bullish views from investment banks and expectations of an aggressive US stimulus plan — have been diminished.

Meanwhile, a looming financial crisis in Europe has spooked energy markets as it raises the specter of another global recession. As a result, oil prices have plunged. Benchmark crude has dropped 32 per cent since peaking near US$114 per barrel in late April. Oil slipped as low as US$74.95 yesterday, the cheapest price since September of last year. It recovered somewhat, but remains below US$76 per barrel.

If oil holds at that level, or falls further, gasoline will become cheaper. That would save US drivers roughly US$5.1 billion over the next three months. The drop also means homeowners could see lower heating bills this winter.

This could give US consumers more money to spend at retail outlets, restaurants and elsewhere. Lower oil prices should also lead to a decrease in fuel costs for shipping companies and airlines.

But there is a downside: the decline reflects an increasingly dim view of the world economy. Oil demand was expected to rise sharply this year as factories expanded production and consumers bought more cars. Economists still expect global demand for oil to grow but at a slower pace.

The Paris-based International Energy agency reduced its forecast for global demand this year by about 60,000 barrels a day to an average of 89.5 million barrels a day.

Goldman Sachs has slashed its 12-month expectation for benchmark crude by US$10.50 to US$116 per barrel and it cut its Brent crude forecast by US$7.50 to US$122.50 per barrel.

In a separate report that could have implications for the energy markets, the investment bank cut its expectations for economic growth in China as the U.S. and other countries order fewer Chinese-made products.

Wunderlich Securities also cut its forecast for oil, citing the “unrelenting stream of bad news dominated the headlines.”

In yesterday’s trading, Brent crude lost US$1.92 to finish at US$99.79 per barrel in London. That’s the first time Brent ended lower than US$100 since February. But Brent, which is the benchmark for many international varieties of oil, is still up 5.3 per cent for the year.

The benchmark US crude dropped for a third day, giving up US$1.94 to end the day at US$75.67 a barrel on the New York Mercantile Exchange. It’s down 17.2 per cent so far this year.