Oil falls on slow economic growth

AP News
Posted: Aug 26, 2011 6:24 PM
Oil falls on slow economic growth

Oil held above $85 per barrel Friday on news that the economy didn't grow as fast as previously expected. Slower growth lowers energy demand.

The government said Friday that the U.S. economy grew at just 1 percent from April to June, down from previous estimates of 1.3 percent. Federal Reserve Chairman Ben Bernanke also didn't propose new steps to stimulate the economy during a speech in Wyoming.

Benchmark West Texas Intermediate crude rose 7 cents to $85.37 per barrel in New York. Brent crude rose 74 cents to $111.36 in London.

Hurricane Irene is expected to shut down refineries, power plants and gasoline import terminals as it winds up the Eastern Seaboard. The storm, which could reach North Carolina's Outer Banks on Saturday with winds around 100 mph, could stifle fuel supplies in coming days, but analysts said prices shouldn't rise by much.

The nation remains well supplied by refining hubs along the Gulf Coast and the West Coast.

Besides, analyst Michael Lynch said, gasoline demand should plunge along the East Coast as people stay home and businesses close.

Meanwhile, retail gasoline prices rose a penny to $3.592 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of gasoline is 39.3 cents cheaper than early May, when prices peaked near $4 per gallon. However, the national average is still 90.4 cents higher than the same time last year.

In other Nymex trading, heating oil added 2.26 cents to $3.0158 per gallon and gasoline futures lost 1.57 cents to $2.786 per gallon. Natural gas added less than a penny to $3.912 per 1,000 cubic feet.