Oil falls more than 2 percent on Europe concerns

AP News
Posted: Sep 19, 2011 3:21 PM
Oil falls more than 2 percent on Europe concerns

Oil dropped more than 2 percent Monday on growing concerns about Europe's ability to solve its credit crisis.

Benchmark crude lost $2.26, or 2.6 percent, to finish at $85.70 per barrel in New York. Brent crude fell $3.098, or 2.7 percent, to end at $109.14 in London.

The drop mirrored a broad decline in stock markets. The Dow Jones industrial average, the Standard & Poor's 500 and the Nasdaq were all down.

The dollar also rose against other major currencies, including the euro. That tends to push down oil prices, because oil is priced in U.S. currency and a rising dollar makes crude more expensive for investors with foreign money.

Oil has been falling since Friday, when European leaders delayed more emergency funds to Greece. If the Greek government defaults, it could destabilize the economies of other countries as well.

Greece's finance minister said Monday that his country will try to avoid international "blackmail and humiliation" by speeding up reforms and civil-service staff cuts.

Analyst Stephen Schork said energy traders are looking for greater assurances that the eurozone leaders, especially Germany, remain committed to bankrolling aid programs for weaker members.

"The northern European countries are tired of paying for their neighbors on the Mediterranean," he said. "You need some sort of assurance that the Germans will play ball."

Gasoline pump prices fell Monday to a national average of about $3.59 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is almost 86 cents higher than a year ago.

In other commodities trading, heating oil lost 6.42 cents, or 2.1 percent, to finish at $2.9447 per gallon and gasoline futures fell 8.76 cents, or 3.2 percent, to end at $2.6965 per gallon. Natural gas was up 2 cents to finish the day at $3.829 per 1,000 cubic feet.