Oil trades below US$93 on euro crisis concern

 NEW YORK—The price of oil fell yesterday as worries persisted about the future of Greece in the European Union and the long-term impact the crisis could have on the global economy. Some wonder if Greece will be forced to leave the group of countries that use the euro as currency if Greek politicians who oppose austerity measures win next month’s elections. That uncertainty has outweighed positive US economic news. The Labour Department said that weekly applications for unemployment benefits were unchanged last week at a seasonally adjusted 370,000. That indicated modest gains in the job market. Benchmark oil for June delivery fell 44 cents to $92.37 a barrel in afternoon trading on the New York Mercantile Exchange.Brent crude, which is used to price many international oil products, fell US$1.94 to US$107.84 per barrel in London. Crude has plummeted about 12 per cent from US$106 two weeks ago amid investor worries that economic growth in the U.S. and China will slow more than previously expected. This week, political turmoil in Greece and growing anti-austerity sentiment in Europe have raised fears of a debt default that could hurt economic growth, undermining crude demand.

 

A stronger dollar makes crude more expensive for traders using the euro and other currencies and tends to push down oil prices.  Yesterday, the euro was down to US$1.2691 from US$1.2725 late Wednesday in New York. In other energy futures trading, the price of natural gas dropped as mild weather curtails demand in parts of the US while supplies continue to build. Natural gas fell 6.77 cents, or 2.5 percent, to US$2.62 per 1,000 cubic feet. Despite a recent rally, the price remains sensitive to reports of significant increase in supply given a current glut. Natural gas plummeted earlier this year as a production boom helped fill storage facilities while a mild winter allowed consumers and businesses to use less gas for heat. On April 19, the price hit US$1.907 per 1,000 cubic feet, the lowest level in more than a decade. The price came back after that as some energy companies reduced production. Heating oil dropped 2.85 cents to US$2.8691 per gallon and gasoline futures declined 3.09 cents to US$2.89 per gallon. (AP)