Oil price falls amid renewed worry over Europe

(David McNew/Getty Images)

(AP) NEW YORK - The price of oil is falling as concerns rise over Europe's debt-ridden economies.

Borrowing costs soared for Spain and Italy Monday, reaching levels that are considered unsustainable for more than a few months. Spain and about a third of other eurozone nations already are in recession, and many analysts worry that other European nations will follow.

As Europe struggles, its demand for manufactured goods from the U.S. and China will likely decline. China, the world's second biggest oil consumer behind the U.S., already foresees slower economic growth in the third quarter. And the U.S. economy is still sluggish. Less growth means less demand for oil.

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Benchmark U.S. crude prices fell $2.19, or 2.4 percent, to $89.64 per barrel in New York. Brent crude, which sets the price for imported oil, lost $2.48, or 2.3 percent, to $104.35 per barrel in London.

Stocks also fell with most major indexes down more than 1 percent in afternoon trading.

At the pump, gasoline prices rose by 2.4 cents over the weekend to a national average of $3.471 per gallon, according to AAA, Wright Express and Oil Price Information Service. The price of a gallon of regular increased in July by an average of 14 cents, but it's still 46 cents cheaper than the peak for the year in April.

In other futures trading, heating oil fell by 6 cents to $2.86 per gallon, while wholesale gasoline lost 3 cents to $2.91 per gallon. Natural gas was up a penny at $3.09 per 1,000 cubic feet.