Oil: Price drops 4 percent on signs of slower growth in China
BY SANDY SHORE AP Business Writer
Wednesday, October 03, 2012
New evidence that China's economy is slowing set off the biggest drop in oil prices in five months.
Data released Wednesday showed China's services sector expanded at a cooler pace in September. That came just days after a survey indicated that the country's manufacturing continues to slow.
Those reports, plus an ongoing financial crisis in Europe, have called into question the strength of global demand for oil. China is the world's second largest economy and a huge importer of commodities like oil.
Benchmark oil fell $3.75, or 4.1 percent, to $88.14 per barrel Wednesday in New York. That was the biggest decline since May 4 when oil fell $4.05 per barrel.
Brent crude, which is used to price international varieties of oil, fell $3.40, or 3 percent, to $108.17.
The China news overshadowed signs of improvement in U.S. service companies, which employ nearly 90 percent of the work force. The Institute for Supply Management said its index rose in September at the fastest pace since March.
Meanwhile, the government said crude inventories fell slightly last week but remain 8.4 percent above year-ago levels. Gasoline supplies rose.
At the pump, AAA said the national average price for gasoline is essentially flat at $3.78 per gallon. That's about a nickel less than a month ago but nearly 37 cents more than a year ago.
In other energy futures trading:
— Natural gas fell 13.6 cents, or 3.8 percent, to $3.395 per 1,000 cubic feet, a day after hitting a high for the year.
— Heating oil dropped 5.9 cents to $3.066 per gallon.
— Wholesale gasoline dropped 7 cents, or 2.5 percent, to $2.80 per gallon.