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Oil falls to near $78 a barrel as Asian stock markets dive and US data suggests weak demand
BANGKOK (AP) ' Oil prices extended losses Monday as Europe's debt crisis continued to roil markets and falling personal incomes in the U.S. suggested slack demand for fuel.
Benchmark oil for November delivery was down $1.07 to $78.17 a barrel in late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. On Friday, benchmark crude dropped $2.94, or 3.6 percent, to settle at $79.20 per barrel in New York. Prices haven't finished that low since Sept. 29, 2010.
Brent crude was down $1.16 to $101.60 per barrel on the ICE Futures Exchange in London.
Analysts at the Schork Report said U.S. data showing a decline in personal incomes suggests that oil prices could continue to fall. Americans earning less money are likely to curb spending on consumer items and fuel.
A slump in Asian stock markets on Monday was another cue for oil to drop and a stronger dollar also weighed. Commodities such as crude are generally traded in dollars, so when the dollar rises it makes oil more expensive for buyers with other currencies, reducing demand.
In the U.S., data pointed to further economic troubles heading into a traditionally weak time for petroleum demand. The Commerce Department said that Americans are earning less money, which could affect consumer spending and demand for oil.
And October is usually a slow month in the oil business. The North American summer driving season is over, and it will be a couple of months before heating demand perks up and travelers set out for winter holidays.
In other Nymex trading, heating oil was down 1 cent to $2.77 per gallon and gasoline futures dropped 1.3 cents to $2.526 per gallon. Natural gas was up 3 cents to $3.69 per 1,000 cubic feet.
Oil has swung up and down in the last few weeks as the European financial crisis roiled markets.
Greece is waiting for a group of international lenders to approve an installment of a multibillion euro (dollar) loan to keep the country from defaulting on its debts. Otherwise, it will run out of money in two weeks.
A default could trigger economic crises in other European countries and upend banks that are heavily invested in Greek bonds.