New York - The price of oil declined on Monday as Spain's banking crisis added to concerns about the troubled European economy.
Tropical Storm Debby also appeared to be shifting away from the heart of America's oil production in the Gulf of Mexico, reducing the chances for a sustained disruption in United States supplies.
Benchmark US crude fell by $1.52 to $78.23 per barrel at midday on the New York Mercantile Exchange. Brent crude, which helps set the price for oil imported into the US, lost $1.23 to $89.75 per barrel in London.
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 US and China would drop as well.
Tropical Storm Debby gave little support to oil prices after it swept through the Gulf of Mexico without seriously hurting production or imports.
Oil companies evacuated workers and switched off some of their operations over the weekend, temporarily suspending about 23 percent of the Gulf's oil and natural gas production. But workers were already returning Monday as Debby moved north-east. Debby's winds weakened overnight to a maximum of 72km/h as it neared the Florida panhandle.
At the pump, US retail gasoline prices fell by four cents over the weekend to a national average of $3.41 per gallon (90 cents a litre), according to auto club AAA, Wright Express and Oil Price Information Service. That's 52 cents a gallon cheaper than the first week of April, when the national average peaked for the year.
Experts say gas could fall by another 11 cents by the Fourth of July.
In other futures trading, heating oil fell by 1.88 cents to $2.5149 per gallon while wholesale gasoline added 2.75 cents to $2.5974 per gallon. Natural gas added 7.1 cents to $2.696 per 1 000 cubic feet. - Sapa-AP