Oil Falls as Worries About Europe Debt Crisis Continue

By CHRIS KAHN, AP Energy Writer

Concerns about the European financial crisis are still dragging down the price of oil.

Benchmark crude for July delivery fell 32 cents to $92.69 per barrel in Monday midday trading on the New York Mercantile Exchange. The July contract expires on Tuesday, and most of the trading has switched to the August contract, which dropped 33 cents to $93.07 per barrel.

All eyes remain on Greece, which is trying to implement tough new austerity measures necessary to keep international aid coming to help deal with its debt crisis. Without that aid, investors worry that Greece's financial troubles could spread to other European countries.

Credit ratings agency Moody's has warned that it may downgrade its debt rating on three of France's largest banks because of their exposure to Greek debt. Moody's said Monday that it may reduce Italy's credit rating due to that country's poor growth prospects and high public debt.

"The fear is that we end up with a banking crisis like 2008," said Michael Lynch, president of Strategic Energy & Economic Research. "It's a small possibility, but people are reacting to that."
Oil held just below $93 per barrel despite rising stock markets. The Nasdaq and the Standard & Poor's 500 index were up about 0.7% while the Dow Jones Industrial average rose nearly 0.8%.

The dollar leveled off Monday, but Lynch said he expects it to remain strong until investors are convinced that Greece will go through with a plan to cut spending and raise taxes. Greece is expected to vote on the austerity package by the end of the month.

A stronger dollar usually pushes oil lower. Oil is priced in dollars and tends to fall as the dollar rises and makes crude more expensive for investors holding foreign money.

Gas pump prices slipped to $3.646 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 22.1 cents cheaper than a month ago, but it's still 91.2 cents higher than the same time last year.

In other Nymex trading for July contracts, heating oil lost 3.75 cents at $2.9458 per gallon and gasoline futures dropped 2 cents to $2.926 per gallon. Natural gas added less than a penny to $4.331 per 1,000 cubic feet.

In London, Brent crude fell $1.01 to $112.20 per barrel on the ICE Futures exchange.

Chris Kahn can be reached at http://www.twitter.com/ChrisKahnAP

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June 23 2011 at 4:24 PM Report abuse rate up rate down Reply

read here friends about oil crisis, useful info

June 21 2011 at 9:02 AM Report abuse rate up rate down Reply

The speculators will run oil as high as they can without killing the host victim like the parasites they are.
Only way to stop it is regulation.Notice every time some analyst says oil can be this price before it adversely
effects the economy its soon at that price.

June 21 2011 at 12:31 AM Report abuse rate up rate down Reply
Kaash McDonald

We are headed towards a double dip recession regardless of what analysts are saying or not saying! Greece is on a slippery slope, even if the new financial minster is able to pass the budget cuts, enabling the country to receive the next installment of a 100 billion bailout package, you can be sure this won't be the last time. I believe we are at the tipping point, unemployment regardless of what analysts say is at an all time high, we see civil unrest in European Nations and around the world as poverty levels increase and peoples inability to find employment or put food on their tables becomes more difficult. I look around and see home foreclosures on the rise, friends and neighbors out of work, business in my area closing their doors, and the price of food and gas going up, my belief is that the decline in oil prices will be short lived. Mark my words, we are at the tipping point and regardless of the positive spin you hear we are ripe for the fall.

June 20 2011 at 8:44 PM Report abuse rate up rate down Reply

Amazing how we are down $25 a barrell and yet the pump is down 30 cents .... it drops slowwwwwwwwww compared to how fast it goes up overnight when oil spikes.

June 20 2011 at 7:26 PM Report abuse rate up rate down Reply

soon as oil drop 70 a barrel that would be news but this 3 or 4 barrel drop is a game it is the rich taking profit out then they run it up again then sell it again when there no place to put it it has to go down there so much oil out there now that they stop drill for it over in sand land on till we can find a place to put it !!!!!!!!!!!!!!!!!!!!!!!!!!!

June 20 2011 at 3:08 PM Report abuse rate up rate down Reply