Oil price drops below $87; pump prices down again
NEW YORK (AP) — The price of oil fell to a three-month low Tuesday as big corporations cut earnings forecasts, raising concerns about economic growth and oil demand.
Benchmark oil dropped $1.98, or 2.3 percent, to finish at $86.67 per barrel in New York. Oil has lost about 6 percent since Thursday, the biggest three-day drop in a month.
That's starting to mean more relief at the gas pump for U.S. drivers. The national average for a gallon of regular gasoline dropped 2 cents overnight to $3.65. The price has fallen 17 cents in the past 12 days.
Gas prices tend to fall at this time of year. Refiners make a cheaper blend of gasoline for the cooler months, and people drive fewer miles. This year, tepid economic growth means demand could be slower than normal. That's why gasoline futures have plunged 12 percent in less than two weeks, including a 4.3-cent drop Tuesday to $2.61 per gallon.
That could put a few more dollars in consumers' pockets by the holidays. AAA predicted Monday that the average price of gas should be down to between $3.25 and $3.40 by Thanksgiving. The average was $3.32 a gallon on Thanksgiving last year.
Oil has plunged as jitters on Wall Street have migrated to the energy markets. 3M Co., with products ranging from Scotch tape to traffic sign coatings, and Posco, the big Korean steel maker, were among the major companies on Tuesday that cut forecasts because of weak economic growth in China and Europe. Caterpillar Inc., the big machinery company, did the same on Monday. That gloominess has sent most global stock markets sharply lower.
"The poor earnings reports seem to have rekindled worries that the global economy is under pressure and slowing," said Tradition Energy oil analyst Gene McGillian.
Brent crude fell $1.19, or 1.1 percent, to end at $108.25 per barrel in London. Brent has dropped more than 5 percent in the past six trading sessions.
In other futures trading in New York:
— Heating oil fell 3.33 cents to finish at $3.043 per gallon.
— Natural gas broke the trend, rising 8.3 cents to end at $3.535 per 1,000 cubic feet after falling sharply Monday.