Oil price falls near US$83 on Europe concerns


THE price of oil fell yesterday as investors' worries about Europe shifted to Spain.

US West Texas Intermediate crude fell by 76 cents to end the day at US$83.27 per barrel on the New York Mercantile Exchange. Brent crude, which helps set the price for much of the oil imported into the US, slipped US$1.56 to US$96.05 per barrel in London.

Oil prices declined as yields on Spain's bonds soared - a sign that investors fear the country could default on its debts. That overshadowed other events in Europe, including a weekend election in Greece where voters gave a narrow victory to a party that supports a bailout of the nation's failed economy.

Europe's crisis risks eroding oil demand in the region, and it poses a threat to slowing economies in the US and China.

"Oil is really reflecting concern about where the economy is headed in coming months," said Gene McGillian, a broker and oil analyst at Tradition Energy.

Investors also are watching international talks this week in Moscow over Iran's nuclear program. But analysts have little hope for a sweeping agreement that could delay or cancel a planned European embargo of Iranian oil shipments.

In the US, natural gas prices jumped 6.8 percent following forecasts yesterday of toasty weather above 90 degrees from Denver to Chicago to the East Coast. The futures contract rose by 16.8 cents to finish at US$2.635 per 1,000 cubic feet in New York. Natural gas, which is used by power companies to generate electricity, is expected to be in high demand this summer as homeowners crank up their air conditioners.

Retail gasoline prices fell less than a penny to a national average of US$3.505 a gallon (92 cents a liter), according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded has dropped by 43 cents per gallon since peaking this year during the first week in April. It's also 15.8 cents cheaper than the same time last year.

In other energy trading, heating oil lost 2.88 cents to end at US$2.6177 per gallon and gasoline futures lost 4.08 cents to finish at US$2.6609 per gallon.



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