Oil settles below $74 on mixed economic data

[June 12, 2010]  BEIJING (AP) -- Oil prices lost ground on Friday but ended the week higher than where they started it. Gasoline pump prices continued their slow slide to levels of a year ago as drivers hit the road for the weekend.

Benchmark crude for July delivery dropped $1.70 to close at $73.78 a barrel on the New York Mercantile Exchange. The contract rose $1.10 to settle at $75.48 a barrel on Thursday. Prices started the week at $71.51.

Retail gasoline prices edged lower to a national average of about $2.70 per gallon, down more than 20 cents in the past five weeks, according to AAA, Wright Express and Oil Price Information Service. Pump prices have fallen 2.2 cents in the past week and are now just 7.2 cents higher than a year ago.

Analysts have said if oil stays around $70 a barrel, retail gasoline could drop to about $2.65 per gallon.

Reports this week that Chinese exports rose by nearly 50 percent in May helped crude prices at midweek. So did reassuring words from Federal Reserve Chairman Ben Bernanke that the recovery in the U.S. remains on track and the economy is unlikely to fall back into recession.

Oil prices got a boost when the Dow Jones Industrial Average, S&P 500 and the NASDAQ all rose about 3 percent on Thursday with the encouraging economic news and prospects for stronger oil and gas demand.

Oil traders have been trying to get a sense of where prices are headed from a mixed bag of data. On Friday May retail sales came in well below analysts' expectations, while the Reuters/University of Michigan consumer sentiment index said consumer confidence grew to its highest level since January 2008 and was well above forecasts.

"Some of the worst-case scenarios don't look at bleak as they did a couple of weeks ago," PFGBest analyst Phil Flynn said.

After reaching $87.15 a barrel in early May, oil dropped below $70 as concerns rose that the European debt crisis could squash demand for crude and that the U.S. may slip back into a recession.

In other Nymex trading in July contracts, heating oil lost 2.75 cents to settle at $2.0053 a gallon, while gasoline fell 2.08 cents to settle at $2.0497 a gallon. Natural gas gained 13.4 cents to settle at $4.781 per 1,000 cubic feet.

Brent crude fell 94 cents to settle at $74.35 on the ICE futures exchange.

[Associated Press; By MARK WILLIAMS]

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