Oil drops

The price of oil saw its largest drop in five months Wednesday as China's slowing economy raised questions about the strength of global oil demand.
By SANDY SHORE Modified: October 3, 2012 at 10:24 pm •  Published: October 4, 2012
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Oil fell the most in five months on Wednesday as China's slowing economy raised questions about the strength of global oil demand.

Benchmark oil fell $3.75, or 4.1 percent, to $88.14 per barrel Wednesday in New York. That was the biggest decline since May 4, when oil fell $4.05 per barrel.

Data released Wednesday showed that China's services sector expanded at a slower pace in September. The report came just days after a survey indicated that the country's manufacturing sector continues to contract. Those reports, plus the ongoing financial crisis in Europe, call into question the strength of global demand for oil.

Oil demand falls

China is the world's second-largest economy and a huge importer of commodities like oil. China's crude oil imports fell to 4.3 million barrels per day in August, the weakest level since October 2010, analysts at Bank of America Merrill Lynch estimated in a report last week.

Brent crude, which is used to price international varieties of oil, fell $3.40, or 3 percent, to $108.17.

At the pump, the national average price for gasoline is down just two cents over the past week and five cents in a month. Gas prices usually show a more pronounced drop after Labor Day. Refinery outages have caused shortages of gasoline on both coasts, causing gas prices in those regions to rise. California gas prices are averaging $4.23 per gallon, up about 10 cents from a week ago.

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Energy prices

In other energy futures trading:

Natural gas fell 13.6 cents, or 3.8 percent, to $3.395 per 1,000 cubic feet, a day after hitting a high for the year.

Heating oil dropped 5.9 cents to $3.066 per gallon.

Wholesale gasoline dropped 7 cents, or 2.5 percent, to $2.80 per gallon.

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