BOil price drops below $96 a barrelP
BEds: Updates with details, other energy commodity prices. For global distribution.P
BBy Chris KahnP
BAP Energy WriterP
NEW YORK (AP) -- Growing concerns about the European debt crisis on Wednesday pulled oil prices down to their lowest level this month.
Benchmark crude fell $4.30, or 4.4 percent, to $95.84 per barrel in midmorning trading in New York. Prices haven't been that low since Nov. 25.
Brent crude, which is used to produce foreign oils that are imported by some U.S. refineries, lost $3.65, or 3.4 percent, at $105.43 a barrel in London.
A key indicator of Europe's debt problems, the euro, fell to its lowest level against the dollar in 11 months. The euro tumbled as economists warned that a new eurozone economic treaty won't go far enough to deal with its current troubles. New requirements for balanced budgets and more central control may keep nations from building sizable debts in the future, but they do little to chip away at the massive debts that are already on the books, experts said.
When the euro falls, it lifts the value of the dollar. Oil is priced in dollars, and it becomes more expensive -- and less attractive as an investment to foreign buyers -- as the dollar rises.
In the U.S., the government reported that oil demand fell by 5.6 percent compared to a year ago, while wholesale gasoline demand dropped by 4.5 percent. Demand for distillate fuel, which includes diesel, rose 1.8 percent and jet fuel demand fell 2.6 percent.
The Energy Information Administration report said the nation's oil supplies fell by about 2 million barrels last week. That was close to analysts' forecasts. Gasoline supplies rose by nearly twice what was expected.
In other energy trading, heating oil lost 7 cents to $2.85 per gallon, while gasoline futures fell by 10 cents to $2.53 per gallon. Natural gas futures lost 12 cents to $3.16 per 1,000 cubic feet.