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Oil drops as investor look toward solution to Cyprus issue

Benchmark oil for May delivery was down 54 cents to $92.96 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange.

By PAMELA SAMPSON
The Associated Press

3/21/2013

BANGKOK  — The price of oil fell Thursday as traders awaited a solution to a financial crisis in Cyprus that has raised fears of a destabilizing exit of the country from the euro.

Benchmark oil for May delivery was down 54 cents to $92.96 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract for April delivery gained 80 cents to settle at $92.96 a barrel on Wednesday.

European jitters have escalated since the government in Cyprus rejected a bailout plan Tuesday that would have taxed bank deposits. The Mediterranean nation needs to come up with 5.8 billion euros ($7.5 billion) on its own in order to secure 10 billion euros in rescue loans from international creditors.

Without a bailout deal, Cyprus' banks would collapse, devastating the country's economy and potentially forcing it to exit the euro currency.

"It's hard to think that the island tourist country of Cyprus could really drag the Bulls down," said Carl Larry, president of Oil Outlooks and Opinions in a commentary. "It's the farthest from any kind of sustainable industry outside of tourism and they depend solely on interest earned from their banking system."

Brent crude, used to price many kinds of oil imported by U.S. refineries, fell 42 cents to $108.30 a barrel on the ICE Futures exchange in London.

The American Petroleum Institute said crude oil stocks fell by about 400,000 barrels to 376.7 million barrels for the week ending March 15. On Wednesday, the Energy Department said the nation's crude oil supplies declined last week by 1.3 million barrels, or 0.3 percent, to 382.7 million barrels, which is 10.5 percent above year-ago levels. Analysts were expecting supplies to increase.

In other energy futures trading on the Nymex:

— Wholesale gasoline fell 1.4 cents to $3.089 a gallon.

— Heating oil dropped 0.7 cent to $2.988 a gallon.

— Natural gas fell 1.3 cents to $3.947 per 1,000 cubic feet.