Oil price falls on concerns about global economy

By CHRIS KAHN,AP Energy Writer Updated at 2012-05-02 19:48:54 +0000

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NEW YORK (AP) — Oil prices fell Wednesday on concerns of a weakening European economy and disappointing job growth in the U.S.

Benchmark West Texas Intermediate crude gave up 86 cents to $105.30 per barrel in New York. Brent crude, which helps set the price of oil imported into the U.S., lost $1.35 to $118.31 per barrel in London.

Prices dropped after a survey showed that Europe's manufacturing industry is slowing down. Germany's unemployment figures also increased in April. That's happened only twice in more than two years. A separate report says U.S. businesses added 119,000 jobs in April, far lower than the 201,000 added in March.

Oil and natural gas demand has been declining this year in the U.S. and Europe, and it could fall further if their economies struggle.. The U.S. is the world's largest oil consumer. Europe uses nearly a fifth of the world's oil.

The Energy Department's Energy Information Administration also reported on Wednesday that U.S. oil supplies grew slightly more than expected last week, while demand fell nearly 2 percent. The nation's crude inventories increased by 2.8 million barrels from the previous week, to 375.9 million barrels in storage. At the same time, gasoline supplies dropped by 2 million barrels.

The EIA report said wholesale demand for gasoline was down almost 5 percent from a year ago, as many motorists continue to be careful about how much they drive and fill up their tanks.

Retail U.S. gasoline prices fell by less than a penny on Wednesday to a national average of $3.80 per gallon, according to AAA, Wright Express and Oil Price Information service. That's about 12 cents lower than a month ago, but the average is still above $4 a gallon in seven states and the District of Columbia.

In other energy futures trading, heating oil fell by 3.53 cents to $3.1418 per gallon, gasoline fell by 1.92 cents to $3.0779 a gallon and natural gas lost 10 cents at $2.27 per 1,000 cubic feet.

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