Prices dip below $70; BP spill not slowing drop in crude.
Oil prices on Monday fell to their lowest point so far this year and are now down about 20 percent in just two weeks as investors worry about the ripple effects of a debt crisis in Europe.
There is fear in both equities and commodities market that economic weakness in Europe could spread to the U.S. and hurt the global recovery. A drop in the euro has hurt the case for investing in oil.
The turnaround in oil prices has been sudden — crude hit an 18-month high of $87.15 a barrel during trading on May 3. It settled Monday at $70.08 after dipping as low as $69.27. The plunge is similar to the fall from mid-January to early February when prices fell from $84.95 to $69.50 per barrel.
The big difference now is that the latest decline occurred at the onset of summer driving season. That’s good news for U.S. motorists, who should soon see sharply reduced pricesat the pump. Gas has fallen just 2 percent nationwide since peaking earlier this month at $2.929 per gallon. But that pace should pick up heading into the Memorial Day weekend and the summer driving season.
Prices in many markets in the U.S. will be $2.75 per gallon or lower by next week, said Tom Kloza of the Oil Price Information Service.