Stock market, Korea tension drop oil prices
Crude rate falls 22 percent in 3 weeks, trickles down to what’s paid at pump
NEW YORK — Oil prices continued their three-week slide yesterday, pulled down by falling global stock markets, a declining euro, and saber-rattling in Korea.
Benchmark crude for July delivery dropped $1.46 to settle at $68.75 a barrel on the New York Mercantile Exchange. On Monday, the contract rose 17 cents to settle at $70.21.
Oil prices have fallen 22 percent in the past three weeks, a slump that started with worries about the European debt crisis escalating and spreading globally.
Stock markets around the world fell yesterday on worries that Europe’s problems will slow global growth and demand for crude and gasoline. The Dow Jones industrial average was down more than 200 points and below the 10,000 mark for most of the day. It cut almost all the loss to close down about 23 points. The Nasdaq closed down slightly, as well. The S&P 500 closed a little higher.
The euro slid against the dollar to around the four-year low it hit last week. Because crude is traded in dollars, it becomes more expensive for holders of other currencies when the dollar gets stronger.
Traders also moved into the dollar and safer investments on reports that North Korea’s leader, Kim Jong Il, had ordered his military to combat alert after Seoul blamed Pyongyang for sinking a South Korean warship two months ago.
Oil prices have been volatile for months, with swings of $10 to $15 per barrel since fall. Traders wonder whether crude has reached the bottom and will go back up or if it has farther to fall.
The big spill in the Gulf of Mexico that has been spewing crude since April 20 has not affected oil prices. Tankers bringing imported oil to Gulf ports and taking refined product out continue to work around the huge slick at the mouth of the Mississippi River.
The drop in crude prices continues to work its way into retail gasoline prices. Pump prices fell 1.3 cents overnight to a national average of $2.78 per gallon, according to AAA, Wright Express, and Oil Price Information Service.
Prices are down 7.9 cents in the past week and 7.4 cents over the past month. They are still 35.6 cents higher than a year ago.
In other Nymex trading in June contracts, heating oil fell 2.76 cents to settle at $1.8717 a gallon, and gasoline dropped 4 cents to settle at $1.9308 a gallon. Natural gas rose 3.4 cents to settle at $4.051 per 1,000 cubic feet.
In London, Brent crude fell $1.62 to settle at $69.55 on the ICE futures exchange.
