Oil prices fall for a 5th day, down 2 percent


OIL extended a weeklong decline as signs of global economic weakness raise concerns about energy demand.

Yesterday benchmark US crude lost 93 cents to US$97.01 per barrel in New York, after briefly dipping below US$96 around midday. Oil has fallen US$7.86 per barrel, or 7.5 percent, so far this month.

Brent crude lost 43 cents to US$112.73 per 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 US have 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 per barrel by Labor Day.

US gasoline prices are also falling. The national average has dropped by 17.2 cents per gallon since early April, hitting US$3.76 per gallon yesterday. A gallon of regular is about 20 cents cheaper than it was at the same time last year, according to AAA, Wright Express and Oil Price Information Service.

The Energy Department's Energy Information Administration cut its forecast for gasoline prices in its short term energy outlook. EIA expects regular gasoline to average US$3.79 per gallon during the April-through-September summer driving season. That's 16 cents per gallon below the level in EIA's April outlook. EIA thinks gasoline will average US$3.71 per gallon this year and US$3.67 per gallon in 2013.

In other energy futures trading, heating oil gained less than a penny to US$2.99 per gallon and gasoline rose by 2 cents to US$2.9944 per gallon. Natural gas lost 5.7 cents to US$2.393 per 1,000 cubic feet.



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