By CHRIS KAHN, AP Energy Writer –
NEW YORK (AP) — Concerns about the European financial crisis are still dragging down the price of oil.
Benchmark crude for July delivery fell 32 cents to $92.69 per barrel in Monday midday trading on the New York Mercantile Exchange. The July contract expires on Tuesday, and most of the trading has switched to the August contract, which dropped 33 cents to $93.07 per barrel.
All eyes remain on Greece, which is trying to implement tough new austerity measures necessary to keep international aid coming to help deal with its debt crisis. Without that aid, investors worry that Greece's financial troubles could spread to other European countries.
Credit ratings agency Moody's has warned that it may downgrade its debt rating on three of France's largest banks because of their exposure to Greek debt. Moody's said Monday that it may reduce Italy's credit rating due to that country's poor growth prospects and high public debt.
"The fear is that we end up with a banking crisis like 2008," said Michael Lynch, president of Strategic Energy & Economic Research. "It's a small possibility, but people are reacting to that."
Oil held just below $93 per barrel despite rising stock markets. The Nasdaq and the Standard & Poor's 500 index were up about 0.7 percent while the Dow Jones Industrial average rose nearly 0.8 percent.
The dollar leveled off Monday, but Lynch said he expects it to remain strong until investors are convinced that Greece will go through with a plan to cut spending and raise taxes. Greece is expected to vote on the austerity package by the end of the month.
A stronger dollar usually pushes oil lower. Oil is priced in dollars and tends to fall as the dollar rises and makes crude more expensive for investors holding foreign money.
Gas pump prices slipped to $3.646 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 22.1 cents cheaper than a month ago, but it's still 91.2 cents higher than the same time last year.
In other Nymex trading for July contracts, heating oil lost 3.75 cents at $2.9458 per gallon and gasoline futures dropped 2 cents to $2.926 per gallon. Natural gas added less than a penny to $4.331 per 1,000 cubic feet.
In London, Brent crude fell $1.01 to $112.20 per barrel on the ICE Futures exchange.
Chris Kahn can be reached at http://www.twitter.com/ChrisKahnAP