Oil stays around a four-month low

June 16, 2011 - 11:59 AM

NEW YORK (AP) — Oil stayed near a four-month low on Thursday as investors continue to worry about the European financial crisis.

Benchmark West Texas Intermediate crude rose 8 cents to $94.88 per barrel in midday trading on the New York Mercantile Exchange. In London Brent crude rose 79 cents to $113.80 per barrel on the ICE Futures exchange.

Oil dropped more than 4 percent Wednesday as Greece's financial troubles deepened. The fear is that a Greek default on its debt could seriously impact the economies of other European nations with debt problems, like Spain, Portugal and Ireland. Oil demand would drop if Europe's economy stalls. Europe consumes about 18 percent of the world's oil.

Analyst and trader Stephen Schork said that the U.S. economy would struggle to grow if oil climbs back above $115 per barrel and gasoline stays higher than $3.50 per gallon.

Gasoline pump prices dropped less than a penny on Thursday to a national average of $3.685 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline has gotten cheaper since hitting three-year highs in early May. A gallon of regular is now about 26 cents less than it was a month ago, but it's still 98.5 cents higher than the same time last year.

Meanwhile, the International Energy Agency said Thursday that the world still has a cushion of surplus oil. It challenged assertions by investment bank Goldman Sachs that OPEC was producing about as much oil as possible. IEA said Saudi Arabia and other countries could crank up output by more than 4 million barrels per day. The Paris-based groups added that demand should rise this year to 89.3 million barrels per day, up 120,000 barrels per day from previous estimates.

The U.S. Energy Information Administration said the nation's natural gas supplies grew by 69 billion cubic feet last week. The increase was within analysts' expectations, and storage levels are lower than average for this time of year.

Natural gas lost 11 cents, about 2.4 percent, at $4.468 per 1,000 cubic feet on the Nymex.

In other Nymex trading for July contracts, heating oil added 3 cents to $3.0100 per gallon and gasoline futures gained 4 cents at $2.9649 per gallon.