Less demand forces price of oil below $60 a barrel

ASSOCIATED PRESS

NEW YORK — Oil prices sank below $60 a barrel Friday, ending a week in which crude has fallen more than 10 percent on growing pessimism about the economy and also the well-being of companies about to report second-quarter earnings.

Benchmark crude for August delivery fell 52 cents to settle at $59.89 a barrel on the New York Mercantile Exchange, but at one pointed traded as low as $58.72.

The International Energy Agency said Friday it expects energy demand to drop 2.9 percent this year.

The Paris-based IEA said economic recovery in developing countries will help counter the effects of the recession in the West and Japan. It expects demand to rise by 1.7 percent in 2010.

Corporate earnings that will be released over the next several weeks will be a good indicator of how well the global economy has fared this year and whether energy use could diminish further.

After falling close to $30 per barrel, crude prices had been rising steadily and peaked last week above $73. But dismal jobs numbers suggested energy use will be muted for some time, and prices have tumbled 19 percent since then.

“All the focus is on demand,” said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets. “The second-quarter earnings season is going to be very important for crude. If we see disappointments there, people will say, ’We’ve gone too far, too fast.”’

Americans, who consume more gasoline than anyone else, have slashed their driving, and gasoline prices have followed.

Retail gasoline prices fell nearly 2 cents overnight to a new national average of $2.565 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

Pump prices have now fallen for 19 consecutive days. Last year at this time, gasoline cost more than $4.10 per gallon and would not peak for seven days.