Oil price drops below $80 for 1st time since October

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The price of oil has dipped below $80 a barrel for the first time since October.

 

Benchmark U.S. crude, which has been tumbling since May, hit a low of $79.25 per barrel in morning trading on the New York Mercantile Exchange. That’s the lowest level since Oct. 6. It rose slightly, to $79.53 in midday trading.

 

Brent crude, which helps set the price of oil imported into the U.S., fell by $1.94, or 2.1 percent, to $90.75 per barrel in London.

 

Prices have been falling as the world economy slows. America isn’t creating as many jobs as hoped earlier this year, Europe faces another recession and manufacturing activity in China appears to have slowed.

 

On Thursday, reports out of China and the U.S. both pointed to a slowdown in manufacturing activity. Platts, the energy-information arm of McGraw-Hill Cos. also noted that China’s oil demand rose less than 1 percent in May, the second-smallest increase this year.

 

Meanwhile analysts say investors are disappointed that the Federal Reserve didn’t announce more aggressive moves to stimulate the U.S. economy after its meeting this week. The Fed will extend an existing program to lower long-term interest rates, but it doesn’t plan to pump more money into the economy as it has previously.

 

The drop in oil prices has made gasoline cheaper this summer for U.S. motorists. The pump price fell to a national average of $3.472 per gallon (91 cents a liter) Thursday, according to AAA, Wright Express and Oil Price Information Service. That’s down 46 cents (12 cents a liter) from its peak in early April.

 

Natural gas prices jumped more than 3 percent Thursday after the government said that the nation’s supplies didn’t grow as much as expected last week. The Energy Information Administration’s report said the U.S. was holding more than 3 trillion cubic feet of gas in storage facilities. That’s more than 27 percent higher than average for this time of year, but a little less than what analysts expected.

 

Natural gas futures rose 9.5 cents to $2.612 per 1,000 cubic feet in New York.

 

In other energy futures trading, heating oil lost 3.33 to $2.5541 per gallon, while wholesale gasoline lost less than a penny to $2.5805 per gallon.