Oil stays around a four-month low

AP News
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Posted: Jun 16, 2011 3:51 PM
Oil stays around a four-month low

Oil stayed near a four-month low on Thursday as investors continued to worry about the European financial crisis.

Benchmark West Texas Intermediate crude rose 14 cents to settle at $94.95 per barrel on the New York Mercantile Exchange. In London Brent crude rose $1.01 to settle at $114.02 per barrel on the ICE Futures exchange.

Oil dropped more than 4 percent on Wednesday as Greece's financial troubles deepened. And worries about Europe's economy continued on Thursday. The fear is that a Greek default on its debt could seriously impact other European nations with debt problems, like Spain, Portugal and Ireland. Europe consumes about 18 percent of the world's oil, and oil demand would likely drop if Europe's economy stalls.

"I don't think anyone is convinced this is going to go away overnight," PFGBest analyst Phil Flynn said. At the very least "the demand outlook is really murky," he said.

Analyst and trader Stephen Schork said that the U.S. economy could struggle to grow if gasoline stays above $3.50 per gallon and Brent crude climbs above $115 per barrel.

Gasoline pump prices dropped less than a penny on Thursday to a national average of $3.685 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline has gotten cheaper since hitting three-year highs in early May. A gallon of regular is now about 26 cents less than it was a month ago, but it's still 98.5 cents higher than the same time last year.

Meanwhile, the International Energy Agency said Thursday that the world still has a cushion of surplus oil. It challenged assertions by investment bank Goldman Sachs that OPEC is producing about as much oil as possible. IEA said Saudi Arabia and other countries could crank up output by more than 4 million barrels per day. The Paris-based groups added that demand should rise this year to 89.3 million barrels per day, up 120,000 barrels per day from previous estimates.

The U.S. Energy Information Administration said the nation's natural gas supplies grew by 69 billion cubic feet last week. The increase was within analysts' expectations. Levels are lower than average for this time of year.

Natural gas lost 16.5 cents, about 3.6 percent, to settle at $4.412 per 1,000 cubic feet on the Nymex.

In other Nymex trading for July contracts, heating oil added 1.9 cents to $3.0038 per gallon and gasoline futures gained 2.59 cents to settle at $2.9494 per gallon.