NEW YORK — Oil tumbled yesterday to the lowest price since May 17 after a lowering of Greece’s credit rating added to concern about a European economic slowdown.
Tweet Be the first to Tweet this!
ShareThis
Benchmark West Texas Intermediate crude dropped $1.99, or 2 percent, to settle at $97.30 per barrel on the New York Mercantile Exchange.
Investment banks have predicted oil will rise over the next 18 months. But crude has hovered around $100 since early May because of weak demand for gasoline, consumer confidence, and US jobs data.
Reports that Saudi Arabia would boost oil production to 10 million barrels per day pushed prices lower late last week.
Oil slipped even further after Standard & Poor’s cut Greece’s credit rating, saying risks associated with its bailout are rising, “given the increasingly complicated political environment in Greece coupled with its current difficult economic climate.’’
The downgrade of Greek debt led to a sell-off in oil as investors bet that Greece’s financial troubles could weigh down the entire continent, oil analyst Andrew Lipow said. Europe, which consumes about 18 percent of the world’s oil, could see energy demand fall if its economy struggles.
Brent crude, which is used to price many international oil varieties, rose 32 cents to settle at $119.10 per barrel on the ICE Futures exchange. Brent supplies are expected to tighten because of production problems in the North Sea.
Average US gas prices stood at $3.703 per gallon, down about half a cent from Sunday. A gallon of regular is 26.7 cents cheaper than it was a month ago, but it is still more than a dollar higher than it was last year.
