Worries about slowing global economy pressures oil
The price of oil moved very little Monday, coming off a week where questions about a global economic slowdown sparked an 8 percent decline.
New signs of weakness in the U.S. economy emerged following Friday's disappointing jobs report. Meanwhile, China's economic growth is slowing and Europe is mired in a financial crisis that sent the region's unemployment rate soaring. This is raising questions about the strength of demand for oil and other energy products.
Benchmark oil moved between small gains and losses. The price fell 21 cents to $83.02 per barrel in New York. Brent crude dropped 76 cents to $97.67 in London.
The Commerce Department said Monday that U.S. factory orders fell 0.6 percent in April from March. It was the second straight month of declines. In addition, demand for products such as heavy machinery and computers dropped 2.1 percent in April from March.
Dreary economic news has rattled oil traders. Benchmark West Texas Intermediate oil plummeted 8.4 percent last week and Brent crude, which is used to price international varieties, of oil fell 7.8 percent.
Analyst Jim Ritterbusch said forecasts of slower economic growth likely will lead to reduced expectations of demand for oil, as well as gasoline and diesel.
He and other analysts don't expect to see oil rise much until there are clear signs about where the global economy is headed and, in particular, how Europe will resolve the massive crisis that has kept the region in turmoil for months.
"You've got this pale over the market that is just kind of hanging in. I think people are just getting out of the market right now," oil trader Stephen Schork said.
The barrage of disheartening economic news diminishes the impact of falling gasoline prices. Consumers are conserving more dollars because of uncertainty about jobs and the economy.
Retail gas prices fell 1.4 percent last week and extended the drop Monday. The national average for a gallon of gasoline fell about half a cent to $3.585 overnight, according to AAA, Wright Express and the Oil Price Information Service. That's nearly 21 cents less than it was a month ago.
In other trading, natural gas prices rose on forecasts predicting hot weather across much of the mid-section of the U.S. Accuweather.com projected above-normal temperatures over the next two weeks from Maine to North Dakota and into the Southwest. Natural gas rose 7 cents, or 3 percent, to $2.40 per 1,000 cubic feet.
Heating oil fell 1 cent to $2.62 per gallon and gasoline futures rose 0.32 cent to $2.66 per gallon.
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