NEW YORK (AP) — Oil prices fell to nearly $96 a barrel Monday on signs that the U.S. and Iran may restart talks about Iran's nuclear program.
In New York benchmark oil for March delivery dropped by $1.60 to finish at $96.17 a barrel. Oil prices had risen steadily since they traded near $86 a barrel in mid-December on hopes for an improving global economy.
When economies grow, shippers and travelers use more gasoline and diesel, pushing up demand for oil to make the fuels.
Brent crude, the benchmark used to set prices for oil used by many U.S. refineries, was down $1.16 to end at $115.60 in London.
U.S. retail gasoline prices continued their recent climb, however. The average U.S. pump price rose a penny to $3.52 Monday. The average price has risen 20 cents in just 10 days. The average price is a nickel more than a year ago, and higher than it has ever been at this time of year.
The Energy Department reported Monday that U.S. drivers spent 4 percent of their pre-tax income on gasoline last year, the second highest percentage in thirty years.
Forecasters don't believe drivers will have to pay even more this year. While gasoline prices are higher than last year now, analysts do not expect the recent surge to continue. Oil supplies are relatively high and gasoline demand, especially in the U.S., is weak.
For much of the past two years, tensions in the Middle East have helped keep oil prices high by crimping supplies and raising fears that supplies could be cut even further. Western nations have taken steps to stem the flow of crude out of Iran to try to convince the country to stop what the West says is a program to develop a nuclear weapon.