Oil drops to lowest point of 2012


THE price of oil dropped yesterday to its lowest level of the year after elections in Europe created uncertainty over the region's plan for recovery.

In afternoon trading, benchmark US crude lost US$1.10 to US$97.39 per barrel in New York. It fell as low as US$95.34 per barrel earlier in the day, 10 cents below the previous low set on Feb. 2.

Brent crude lost 48 cents to US$112.70 per barrel in London.

Oil prices declined after voters in France and Greece rejected incumbent leaders who supported austerity measures to fix the region's struggling economy. French voters elected a new president, socialist Francois Hollande, who promised to boost spending. Greek voters ousted numerous pro-austerity candidates and left their parliament without a controlling party.

Analysts warned that the election results could derail the eurozone's plan for recovery. That could further disrupt an economy that consumes 18 percent of the world's oil.

"This is not just a European problem," independent analyst and trader Stephen Schork said. An economic slowdown in Europe could drag down other major economies, including the US and China, that rely on European consumers to buy their manufactured goods.

"There's just much more uncertainty in Europe right now," Schork said. "And that's scaring off some capital" from commodities markets.

In the US, retail gasoline fell 2.5 cents over the weekend to a national average of US$3.777 per gallon on yesterday, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has dropped by nearly 16 cents since peaking in early April at US$3.936. It's 20 cents cheaper than the same time last year.

In other futures trading, natural gas rose 4.8 cents, or 2 percent, to US$2.327 per 1,000 cubic feet. The futures price has jumped by nearly 20 percent since hitting a 10-year low on April 19. Natural gas prices are climbing as temperatures rise in the West, increasing the use of air conditioners and boosting electricity demand.

Heating oil futures gave up 2.88 cents to US$2.98 per gallon and gasoline futures lost 1.02 cents to US$2.9656 per gallon.



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