Oil drops on disappointing economic news

NEW YORK (AP) — Oil fell sharply today, part of broad sell-off in markets that was triggered by worries about the global economy.

In the U.S., two reports raised concerns about demand for gasoline, which is made from oil. First, more people than expected applied for unemployment benefits last week. And prices for gas, food and clothing rose last month.

If more people are out of work or watching what they spend more closely, they won't drive as much.

Gasoline, on average, cost $3.59 a gallon today. That was down 10 percent from a 2011 high of $3.98 on May 5. Gasoline should fall as low as $3.25 between mid-September and mid-October, if oil stays at current levels, says Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service.

There are other factors lowering the price of gasoline. Motorists tend to drive less in the fall once vacation season ends. Refineries also begin making wintertime versions of gasoline, which are less expensive because they contain fewer additives than summertime blends.