NEW YORK - Investor jitters about Europe lead to an abrupt reversal in the price of oil on Tuesday.
Oil was trading above $92 per barrel but reversed course after ratings agency Egan Jones downgraded Spain's debt. The downgrade warned that widespread unemployment and a contracting economy will make it tough for Spain to repay its debts.
The price dropped about 2 percent in less than 30 minutes. Benchmark U.S. crude is down 17 cents to $90.69 per barrel in New York in afternoon trading. Brent crude lost 75 cents to $106.36 per barrel in London.
Analysts have been concerned that Spain and other weak European economies could drag the European Union into recession this year. That would not only impact Europe, a region that consumes 16 percent of the world's oil. It also could harm trading partners like the U.S. and China and slow down global demand for oil.
"That lack of confidence is coming in to the marketplace," PFGBest analyst Phil Flynn said.
Meanwhile, U.S. gasoline prices fell by 3 cents over the Memorial Day weekend to $3.64 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. The national average has dropped by nearly 30 cents per gallon since the first week of April.
In other futures trading, heating oil lost 1.58 cents to $2.813 per gallon while wholesale gasoline added nearly a penny to $2.902 per gallon. Natural gas lost 5.1 cents to $2.517 per 1,000 cubic feet.
