Oil prices dropped near their lows for the year following warnings of a "severe recession" in Europe and an apparent easing of tensions over Iran's nuclear program.
Benchmark U.S. crude on Tuesday lost 91 cents to end the day at $91.66 per barrel in New York while Brent crude fell by 40 cents to end at $108.41 per barrel in London. Both contracts hit a low for 2012 on Friday at $91.48 and $107.14, respectively.
Oil has declined almost every day this month as elections in Greece and France threatened existing plans to fix the eurozone economy. A top economist for the Organization for Economic Cooperation and Development warned Tuesday that the eurozone could fall into recession this year if leaders fail to stimulate the economy.
If that happens, it would stunt growth in world oil demand at a time when supplies are expanding.
Saudi Arabia, Iraq and Libya are producing and exporting more oil this year. And analysts say Iran's oil exports could keep flowing if it lets international inspectors into its nuclear facilities as part of a new deal announced Tuesday.
Western leaders fear Iran is building a nuclear weapon. They've been trying to cut off Iran's oil exports this year to pressure the country to allow in nuclear inspectors. Many nations already have stopped buying Iranian crude and Europe is expected to embargo all oil imports from Iran in July.
Iran says its nuclear program is for peaceful purposes only, but it so far has barred independent inspectors. If it allows them in, Europe may reward Iran by canceling the embargo, said Michael Lynch, president of Strategic Energy & Economic Research.
"If they don't end it, it could be significantly delayed," Lynch said.
Fears of a protracted standoff with Iran had helped push benchmark crude near $110 per barrel in February. Prices have since fallen below levels of early November, when the United Nations first warned of a potential nuclear threat from Iran.
Uninterrupted Iranian exports could boost world oil supplies to an average of 89.15 million barrels per day, according to the latest projections from the Energy Information Administration. That would be more than enough to meet world demand.
At the pump, U.S. gasoline prices fell nearly a penny to $3.68 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded has dropped by 25.6 cents since peaking this year in early April.
In other futures trading, natural gas added 9.8 cents, up 4 percent, to finish at $2.707 per 1,000 cubic feet. Natural gas prices have jumped by 42 percent since hitting a 10-year low on April 19 as supplies declined. Weather forecasters also predicted a toasty Memorial Day weekend across much of the country, which implies that people will crank up their air conditioners and power plants will burn more natural gas for electricity.
Heating oil and wholesale gasoline were both flat, ending the day at $2.8614 and $2.937 per gallon, respectively.
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