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Oil drops below $98 on U.S. demand, Europe votes

3:37 AM, May 7, 2012   |    comments
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SINGAPORE -- Oil slid below $98 a barrel Monday in Asia, bringing its fall over three trading days to about 7 percent, as a slowdown in U.S. hiring and election results in Europe dimmed expectations of stronger economic growth.

Benchmark oil for June delivery was down 86 cents to $97.63 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract plunged $4.05 to settle at $98.49 in New York on Friday. Brent crude for June delivery was down 73 cents at $112.45 per barrel in London.

Crude has slumped from $110 in February amid signs oil demand may be weaker than previously expected. The Energy Department said last week that U.S. crude inventories have risen to the highest since 1990. That was followed by the Labor Department on Friday announcing the economy added 115,000 jobs in April, far fewer than the 165,000 analysts were expecting.

"Economic indicators both in the U.S. and Europe are taking on a more negative appearance," energy trader and consultant Ritterbusch and Associates said in a report.

Investors are also concerned political upheaval in Europe could derail government austerity measures and worsen the region's debt problems.

French Socialist Francois Hollande, who promised during the presidential election campaign to boost spending, defeated President Nicolas Sarkozy.

In Greece, the pro-austerity coalition parties suffered a sharp decline in support, which might undermine efforts to keep Greece in the euro currency bloc.

"Lackluster macroeconomic conditions, easing global tensions and bearish fundamentals have started to weigh on oil prices," Morgan Stanley said in a report.

Oil traders often look to global equities as a measure of overall investor sentiment, and stock markets in Asia were down sharply Monday.

In other energy trading, heating oil was down 1.6 cents at $2.99 per gallon and gasoline futures fell 1.1 cents to $2.97 per gallon. Natural gas was up 2.8 cents at $2.31 per 1,000 cubic feet.

By ALEX KENNEDY, Associated Press

The Associated Press

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