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Oil prices fall after warning from World Bank

Published:Tuesday | October 9, 2012 | 12:00 AM
Oil rig in the Gulf of Mexico. - File

A strong warning from the World Bank that growth in Asia may slow further dragged the price of oil Monday to its lowest close in two months.

The World Bank signalled the possibility of a "more pronounced slowdown" in China, the world's second-largest economy after the United States. It also cut its growth forecast for Asia. Red-hot growth in emerging markets like China and India helped boost oil consumption coming out of the global recession.

Benchmark crude fell 55 cents to close at US$89.33 in New York. The contract has not closed lower since August 2.

At the pump, gas prices remain stubbornly high. The national average for gasolene rose 3 cents on the weekend to US$3.818 a gallon. But Californians are now paying an average of US$4.668 a gallon, the highest price in the United States, after a jump of 50 cents in the past week. Some motorists there are paying more than US$5.

In response, Governor Jerry Brown has ordered state smog regulators to allow cheaper winter-blend gas to be sold three weeks early. And Senator Dianne Feinstein has called for a federal investigation because she doesn't think the higher prices are related to supply and demand.

Experts are predicting prices in California could climb to an average of US$4.85 before coming down.

In London, Brent crude, which is used to price international varieties of oil, fell 20 cents to US$111.82.

In other futures in morning trading, natural gas gained less than a penny to reach US$3.40 per 1,000 cubic feet. Heating oil lost a penny to close at US$3.14 per gallon, and wholesale gasolene fell 6 cents to finish at US$2.89 per gallon.

- AP