Oil falls as global economic worries resurface
An oil rig south of town extracts crude on July 21, 2008 in Taft, Calif. / David McNew/Getty Images
The price of oil plunged 4 percent Wednesday as traders shifted their focus back to the struggles of the global economy.
Benchmark oil dropped $3.56 to $85.15 per barrel Wednesday in New York. That erased a 3.5 percent gain on Tuesday ahead of President Barack Obama's re-election.
European leaders offered more warnings about the region's economy, which has been saddled with a debt crisis for more than three years.
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The European Union's executive arm predicted economic growth across the 27-country region would shrink 0.3 percent this year. In the 17 countries that use the euro, growth was expected to contract 0.4 percent. Unemployment is predicted to remain high into 2014.
That could further weaken oil demand in the region. According to the Energy Department, oil consumption in Europe fell to 14.1 million barrels per day in the third quarter from 14.7 million a year earlier.
In the U.S., the focus is turning to a package of tax increases and spending cuts known as the "fiscal cliff" that will take effect unless Congress acts by Jan. 1. Economists are warning of another recession if Congress and the Obama administration can't strike a deal.
Oil analyst Jim Ritterbusch said slower economic growth and less demand will weigh on oil prices. He predicted that benchmark oil will range between $80 per barrel and $90 per barrel through the end of the year.
Meanwhile, the national average price for gasoline remained at $3.46 per gallon, according to AAA, Wright Express and the Oil Price Information Service. That's nearly 36 cents less than it was a month ago but still about 6 cents higher than a year ago on this date.
Most analysts say motorists should continue to see prices drift lower through at least Thanksgiving.
In other trading, Brent crude, which is used to price international varieties of oil, fell $3.38 to $107.69 per barrel.
Other futures also fell in New York trading:
- Wholesale gasoline dropped 8 cents to $2.62 per gallon.
- Heating oil dropped 7 cents to $2.99 per gallon.
- Natural gas dropped 3 cents to $3.72 per 1,000 cubic feet.
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