Posted: Wednesday, May 23rd 2012 at 12:59pm
Oil drops below $90 for 1st time since Nov. 1
By The Associated Press
NEW YORK - The price of oil dropped below $90 on Thursday for the first time in nearly seven months as U.S. supplies continue to grow.
Benchmark U.S. crude fell $2.25, or 2.5 percent, to $89.60 per barrel. The price hadn't been below $90 per barrel since Nov. 1.
The government said U.S. oil supplies grew last week by 900,000 barrels and hit the highest level since 1990. Analysts expected supplies to grow by 750,000 barrels.
The price of oil and other commodities tend to fall as more supplies become available.
Wednesday's decline follows a monthlong slump in benchmark oil. Prices have been falling on predictions that the European economy will keep slowing down, cutting into what's expected to be record growth in world demand. Meanwhile, Saudi Arabia has been delivering more oil to world markets. And analysts say Iran may be allowed to keep exporting oil this year as it negotiates with the West and allays concerns about its nuclear program.
At the pump, retail U.S. gasoline prices were flat at $3.678 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded has dropped by 25.8 cents since peaking this year in the first week of April. Gasoline is 16.5 cents per gallon cheaper than it was the same time last year.
In other futures trading, heating oil fell by 4.14 cents to $2.82 per gallon while wholesale gasoline lost 5.1 cents to $2.886 per gallon. Natural gas added 1.1 cents to $2.718 per 1,000 cubic feet.
Brent crude, which helps set the price of oil imported into the U.S., dropped to a new low for the year. It lost $2.64 to $105.77 per barrel in London.
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