Oil prices lower a day after big gains

AP News
Posted: Oct 28, 2011 3:59 PM
Oil prices lower a day after big gains

Oil prices dropped Friday as investors acknowledged that Europe needs to tighten its belt for years to work through a credit crisis and factory production stalled in Japan.

Benchmark crude fell 64 cents to end the day at $93.32 per barrel in New York. Brent crude, which is used to price foreign oil, lost $2.17 to finish at $109.91 per barrel in London.

Prices have seesawed for weeks while Europe tried to deal with Greece's debt troubles. Oil soared Thursday after eurozone leaders hammered out an agreement to avoid default, and economic news in the U.S. soothed fears of another recession. Still, analysts agreed that Europe has much more work to do and the U.S. economy is not up to full steam.

"It's going to be a while before we see a broad-based solution to the problem," independent analyst Jim Ritterbusch said.

Europe will likely see energy demand fall while Greece and other countries cut spending to get their national debts under control. Meanwhile one of the continent's biggest oil suppliers, Libya, is expected to resume exports this year after an eight-month stoppage because of unrest there.

Japan on Friday said that factory production fell in September for the first time in six months. The export-dependent nation produced fewer cars, chip-related machines and cellphones as the yen strengthened against other currencies, including the dollar. That made Japanese goods less attractive to foreign buyers and could mean demand for oil will fall as factories slow.

On Wall Street the major stock indexes were little changed after Thursday's big rally. The Dow Jones industrial average, the S&P 500 and the Nasdaq composite index moved between small gains and losses.

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At the pump, gasoline prices rose less than a penny to a national average of $3.448 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline prices are 64 cents higher than they were a year ago.

Natural gas futures prices jumped more than 4 percent as colder weather blanketed much of the eastern U.S. Natural gas rose 16 cents, or 4.2 percent, to end the day at $3.923 per 1,000 cubic feet.

In other energy trading, heating oil lost 4 cents to end at $3.0592 per gallon, while gasoline futures fell 6 cents to finish at $2.6822 per gallon.