Oil price at year low
The price of oil is falling again as inventories grow more than expected and signs that global consumption will slow.
Benchmark light sweet crude for July delivery lost $1.27 to $86.55 US per barrel in midday trading in New York.
Brent crude fell $1.68 to $101.90 per barrel in London.
The U.S. Energy Information Administration said Thursday crude supplies rose by 2.20 million barrels to 384.70 million barrels last week. Analysts had expected a gain of 100,000 barrels.
Because oil is priced in U.S. dollars, a rising greenback — the result of a flight to safety by investors worried about where the global economy is headed — added to the downward momentum of oil prices.
And with ther price of Canada's biggest commodity export slipping, that also weighed on the Canadian dollar, which reached a low for the year, at under 97 cents US.
Oil is also at a 2012 low, and is headed for its biggest monthly decline since December 2008. Oil has dropped more than 18 per cent so far in May.
Prices are falling on expectations that the world won't use as much oil this year as previously thought. Europe's financial crisis is the most immediate concern, but there have been plenty of signs of weaker demand.
Oil rose near $110 per barrel in February because of the potential for conflict between Iran and the West. Those tensions have eased somewhat, and the market's focus has turned to weak spots in the global economy.
Prices have been falling due to a variety of factors. On Thursday, the U.S. reported that the economy grew by 1.9 per cent in the first quarter, slower than first estimated.
The number of Americans seeking unemployment benefits also rose last week to a five-week high.
Tensions also are easing over Iran's nuclear program, reducing chances for a conflict in the Persian Gulf. And China's manufacturing sector is slowing down while Europe's banking crisis threatens to plunge the region into recession.
