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Oil prices rise and fall on supply concerns and shifting economic data
NEW YORK (AP) ' Oil prices were volatile Tuesday on concerns that Middle East strife could disrupt supplies and that U.S. and European economies would continue to struggle.
In midday trading West Texas Intermediate crude, the benchmark used to price oil in much of the U.S., was up 92 cents at $97.86 a barrel in New York. Brent crude, which is used to price oil produced in many foreign countries, rose $1.75 to $108.41 a barrel in London.
Oil prices rose more than a percent Tuesday morning on worries that international sanctions on Iran would reduce the flow of oil from the world's fourth biggest oil producer. Also, large, violent protests in Egypt stirred fears that upheaval in the region could spread and disrupt supplies. Egypt is not a major oil producer, but it does control important energy supply lines and it wields considerable influence over the region because it is the most populous Arab nation.
Prices lost ground after the Commerce Department said that the U.S. economy grew more slowly over the summer than the government had earlier estimated. That picture of a sluggish economy also helped drive the stock market lower as well.
There is also the ongoing concern about Europe's debt crisis pushing the region toward recession. Investors worry that the world financial system could seize up if European banks and banks with ties to Europe stop lending.
When the global economy slows, demand for crude oil and refined products like diesel and gasoline falls because fewer goods are produced and shipped, and people travel less.
"The market is concerned on the one hand on the rate of economic growth," said Andrew Lipow, an independent oil analyst based in Houston. "On the other hand issues in the Middle East are continuing."
The price of gasoline futures rose, however, with mild, fair weather forecast for much of the U.S. over the Thanksgiving weekend. That's expected to motivate drivers to hit the road to visit families and shop. Gasoline futures were up 5 cents at $2.5433 a gallon in New York.
At the pump, retail gasoline fell almost a penny to a national average of $3.34 per gallon on Tuesday, according to AAA, Oil Price Information Service and Wright Express. In coming days, though, the higher price of wholesale gasoline could push up pump prices.
Gasoline demand has been weak in the U.S. over the past several months. U.S. demand began to fall sharply as prices rose above $4 per gallon in many states last winter and spring. Prices, while still high, are 16 percent below the peak national average of $3.98 per gallon reached on May 5.
In other energy trading in New York, natural gas fell 2 cents to $3.542 per 1,000 cubic feet, and heating oil rose 4 cents to $3.0308 a gallon.