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Oil falls to below $90 as Europe's economy falters

Benchmark oil for July delivery was down 84 cents to $89.92 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.

By ALEX KENNEDY
The Associated Press

5/30/2012

SINGAPORE — Oil prices fell to below $90 a barrel Wednesday in Asia amid expectations Europe's sputtering economy will drag on global crude demand.

Benchmark oil for July delivery was down 84 cents to $89.92 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 10 cents to settle at $90.76 in New York on Tuesday.

Brent crude for July delivery was down 76 cents at $105.92 per barrel in London.

Crude has plunged 15 percent from four weeks ago on investor fears that political turmoil in Greece could trigger a chaotic exit of that country from the euro common currency.

Over the last week, traders have closely watched Spain's deteriorating economy. On Tuesday, Spain said retail sales dropped 9.8 percent in April from a year earlier while credit ratings agency Egan-Jones cut the country's debt rating for the third time this month.

"Fears of contagion amid Greek and Spanish debt and economic issues will continue to force downward revision in global economic growth and hence world oil demand," energy trader and consultant Ritterbusch and Associates said in a report.

Europe's wobbly economy has also weighed on the euro, whose drop has pulled oil prices down in recent weeks. A stronger dollar makes commodities priced in dollars, such as crude, more expensive to investors with other currencies.

The euro fell to $1.2457 from $1.2487 late Tuesday in New York.

In other energy trading, heating oil was down 1.2 cents at $2.80 per gallon and gasoline futures fell 1.1 cents at $2.82 per gallon. Natural gas slid 2.2 cents at $2.46 per 1,000 cubic feet.