Oil falls on lingering concerns about Europe
NEW YORK (AP) — The price of oil declined Monday as Spain's banking crisis added to concerns about the troubled European economy.
A tropical storm also moved away from the heart of America's oil production in the Gulf of Mexico, reducing the chances for a sustained disruption in U.S. supplies.
Benchmark U.S. crude fell by 55 cents to end the day at $79.21 per barrel in New York. At one point it had dropped to nearly $78 per barrel.
Oil fell after Spain asked for a loan to support its banking sector, which is reeling from a collapse in the country's real estate sector. Spain hasn't said how much it will ask for, though international audits say the banks need $78 billion.
Concerns about Europe's economy have helped cut oil prices by 25 percent since May 1. Part of the eurozone already is in recession and analysts expect its economy to slow down even more. That will further cut energy demand in a region that consumes 16 percent of the world's oil. Demand for goods made in the U.S. and China would drop as well.
Meanwhile, Tropical Storm Debby gave little support to oil prices after it swept through the Gulf of Mexico without seriously hurting production or imports.
The storm did cause a shutdown of about 44 percent of the Gulf's oil production and 35 percent of its natural gas production. But by Monday many workers were returning to the 189 production platforms and 22 drilling rigs that had been evacuated.
Independent petroleum analyst Jim Ritterbusch said the impact on production wasn't sustained long enough to affect oil prices. Supplies are at the highest level since 1990. One weekend storm won't make a serious dent, Ritterbusch said.