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US oil supplies fell more than expected last week, benchmark crude price slides to near $87
NEW YORK (AP) On signs of a slowing economy the price of oil fell Thursday.
In the U.S., shoppers cut back on spending last month as many retailers reported disappointing sales.
Meanwhile, Europe and China lowered interest rates in an effort to spark consumer borrowing and spending. Interest rate cuts and the expectation that they'll increase economic growth and energy demand have boosted oil prices in the past. This time, analysts said investors are focusing on what those moves say about the economy.
"You have to ask why they are stimulating the economy in the first place," independent analyst and trader Stephen Schork said. "We're still in this economic malaise."
Benchmark U.S. crude lost 55 cents to $87.11 per barrel in New York, although the price of oil has jumped by nearly $10 a barrel in less than a week.
Earlier in the day, the U.S. Energy Information Administration reported that the nation's supplies fell by 4.3 million barrels. Analysts expected a decline of 2 million barrels, according to Platts, the energy-information arm of McGraw-Hill Cos.
A drop in oil supplies usually pushes prices higher, but analysts pointed out that the U.S. still has more oil on hand than in the past 22 years. The country also used less oil and gasoline last week, when compared with a year ago.
Overseas, Norway's Statoil said that striking oil workers will force it to shut down production in the North Sea by 1.2 million barrels per day. That's nearly as much oil lost on world markets last year during the Libyan uprising.
Brent crude, which comes from the North Sea, rose by $1.31 to $101.08 per barrel in London on Thursday. Brent crude helps set the price for oil imported into the U.S. that is used to make gasoline.
At the pump retail gasoline prices were flat at a national average of $3.338 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline prices have held steady this week after dropping nearly 60 cents since the first week in April.
In other futures trading, heating oil lost 1.35 cents to $2.772 per gallon and wholesale gasoline added 5.01 cents to $2.773 per gallon. Natural gas rose by a penny to $2.92 per 1,000 cubic feet.