Published On: Sat, May 26th, 2012

Oil holds near 2012 low

Oil holds near 2012 low

Oil holds near 2012 low

The price of oil is holding near the lowest levels of the year. Benchmark U.S. crude added 34 cents to $91 per barrel in New York while Brent crude rose by 38 cents to $106.93 per barrel in London.

Both crude varieties have tumbled this month on forecasts of weaker world demand and higher supplies. U.S. crude closed Wednesday at $89.90, its lowest close since October.

The economies of the two biggest oil consumers — the U.S. and China — appear to be slowing down. And many analysts are betting that the European Union will fall into a recession as it struggles with massive government debts. Meanwhile, some of the world’s largest oil producing countries have been exporting more crude this year, boosting supplies.

Iran also appears to be interested in defusing tensions over its nuclear program. Tough talk between Iran and the West pushed oil prices higher earlier this year. The U.S. and other world leaders fear Iran is building a nuclear weapon, a charge the oil-rich country denies. Negotiators for the two side made little progress this week but agreed to further talks, which analysts consider a promising sign.

In the U.S., retail gasoline prices fell by a penny to $3.666 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded has declined by 27 cents since the first week of April, giving motorists some last-minute relief at the pump before Memorial Day weekend.

In other futures trading, natural gas fell by 8.1 cents, or 3 percent, to $2.566 per 1,000 cubic feet. Analysts say natural gas prices are falling after government weather forecasts showed temperatures next week would be lower than previously expected. If the weather is cool, fewer people will use their air conditioners, and that will lower demand for natural gas-generated electricity.

Heating oil and wholesale gasoline both added nearly a penny a piece to $2.8312 and $2.8839 per gallon, respectively.

Source : http://www.businessweek.com/ap/2012-05/D9UVQUB00.htm