7/29/2019 Oil drops to $90; gasoline price spike subsides USA TODAY

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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 ofsteep 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 cutsthat started Friday, which could hurt the worlds leading economy.

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7/29/2019 Oil drops to $90; gasoline price spike subsides USA TODAY

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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.

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