Oil drops to $90; gasoline price spike subsides USA TODAY

AAA says the sale and use of E15 should be stopped until theres more information about the ethanol blends effect on engines.(Photo: Frederic J. Brown, AFP/Getty Images)

NEW YORK (AP) Oil dropped below $90 a barrel for the first time this year Monday, although by the end of the trading session, the price had rebounded to $90.05. For consumer, gasoline prices dropped 3 cents a gallon over the weekend as driver caught a break after two months of steep increases. On Monday, the average price nationwide for a gallon of unleaded gasoline was $3.75 a gallon, down from a recent peak of $3.79 a gallon last week. Benchmark oil for April delivery fell 63 cents to $90.05 a barrel Monday on the New York Mercantile Exchange. Oil slid $1.37 on Friday to $90.68 a barrel. A month ago, oil was close to exceeding $100 a barrel. The price of oil declined as investors digest $85 billion in automatic government spending cuts that started Friday, which could hurt the worlds leading economy.

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The federal budget spending cuts kicked in after President Obama and Congress failed to meet a deadline for striking a deal to avert or soften the reductions. Negotiations on Sunday ended in a bitter impasse, and what happens next is anyones guess. The International Monetary Fund predicts the spending cuts could reduce U.S. growth by 0.5% percentage point in 2013 in an economy that is already struggling with subpar growth four years into recovery. Traders also said that a report showing weakness in Chinas service sector contributed to the drop in oil. A report from JBC Energy in Vienna noted that refineries are undergoing a higher than normal rate of maintenance. That reduces demand for oil, hurting the price. And Jim Ritterbusch of Ritterbusch and Associates in Illinois says recent strength in the dollar is a major reason that oil is down 7% in a little more than two weeks. The increase in the dollar makes crude more expensive and a less attractive investment for traders using other currencies. While the euro was worth over $1.36 on Feb. 4, on Monday it was trading just under $1.30. Brent crude, used to price many kinds of oil imported by U.S. refineries, fell 35 cents to $110.05 a barrel on the ICE Futures exchange in London. Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Source Article from http://www.usatoday.com/story/money/business/2013/03/04/oil-below-90-some-relief-at-pump/1 962281/ Waddywood.com Oil drops to $90; gasoline price spike subsides USA TODAY

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