Oil price keeps dropping on global economy concerns, European upheaval

NEW YORK, N.Y. – Oil extended a weeklong decline Tuesday as signs of global economic weakness raised concerns about energy demand.

Benchmark West Texas Intermediate crude lost 93 cents to US$97.01 a barrel in New York, after briefly dipping below $96 around midday. Oil has fallen US$7.86 a barrel, or 7.5 per cent, so far this month.

Brent crude, used to price varieties imported by U.S. refineries, lost 43 cents to US$112.73 a barrel in London.

Election results in France and Greece have called into question Europe’s efforts to solve its debt crisis. Data such as last week’s disappointing jobs numbers in the U.S. have also raised doubts about economic strength outside of Europe.

And Saudi Arabia, the world’s largest oil exporter, has been increasing production in an effort to rein in high oil prices before they inflict economic damage. Saudi oil ministers want to avoid another global recession and a sharp drop in oil like the one seen at the end of 2008.

Increased Saudi supplies mixed with growing concerns about the world economy should push oil prices lower in coming months, said Michael Lynch, president of Strategic Energy & Economic Research. Lynch expects benchmark crude to drop to US$90 a barrel by Labour Day.

In other energy futures trading, heating oil gained less than a penny to US$2.99 a U.S. gallon (3.79 litres) and gasoline rose by two cents to US$2.9944 a gallon. Natural gas lost 5.7 cents to US$2.393 per 1,000 cubic feet.