Oil dropped again Thursday as an increase in the number of people seeking unemployment aid in the U.S. raised concerns about energy demand.
Benchmark oil for May delivery dropped $1.19 to finish at $93.26 a barrel. That makes a two-day drop of $3.93, or four percent. At one point, crude dropped to $92.12 a barrel in Thursday trading.
The number of Americans seeking unemployment benefits rose last week by 28,000, the third straight increase, according to the Labor Department. Weekly applications increased to a seasonally-adjusted 385,000. That’s the highest level since late November.
Applications are a proxy for layoffs, so any indication that fewer people are making the daily commute can be interpreted as a sign of lower demand for gasoline as well.
Worries about slowing demand come on top of concerns about the burgeoning supply of oil in the U.S. On Wednesday, the Energy Department said crude oil inventories rose last week to the highest level since July 1990.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said in a daily newsletter that oil could get a short-term boost if Friday’s unemployment report is better than expected. But he thinks that could give way to a new round of selling, with oil dropping to $89-$90, as the supply issue overhangs the market.
Wholesale gasoline futures fell two cents to end at $2.90 a gallon, and have dropped about seven percent so far this week. Phil Flynn, senior market analyst at Price Futures Group, wrote in a daily report that he believes the lower futures prices will put American drivers “in much better shape as we head into this summer driving season.”
The average price for a gallon of gas is $3.64, according to AAA. That’s 29 cents below a year ago, when gas peaked at $3.94 on April 6. AAA said this week that it expects the average price of gas this year to be below last year’s $3.63 a gallon because of increased domestic production and continued low demand. Gas rose 34 cents in the first quarter of this year, compared with a jump of 65 cents in the first quarter of 2012.
Brent crude, used to price many kinds of oil imported by U.S. refineries, fell 77 cents to finish at $106.34 per barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
- Heating oil fell four cents to end at $2.96 a gallon.
- Natural gas rose five cents to finish at $3.95 per 1,000 cubic feet.