Oil falls below $89; pump prices continue to drop

[October 23, 2012]  (AP) -- Oil hit a three-week low as a major North American pipeline got set to reopen.

Benchmark oil fell $1.32, or 1.5 percent, to finish at $88.73 in New York. That followed a 2 percent decline on Friday and is the lowest close since Oct. 3.

TransCanada is expected to soon restart its 2,100-mile Keystone pipeline. It was shut Wednesday after tests showed possible safety issues. The pipeline carries about 590,000 barrels of crude per day from Canada to facilities in the Midwest.

Falling U.S. stock markets may have also influenced oil traders. Caterpillar, the world's biggest maker of construction and mining equipment, said it doesn't expect the global economy to improve until the second half of next year. Such forecasts signal reduced demand for oil.

U.S. drivers are finally seeing relief at the gas pump. The nationwide average for a gallon of gas fell nearly 5 cents over the weekend to $3.665. That's the lowest price since early August.

In London Brent crude fell 70 cents to end at $109.44.

In other energy trading in New York:

• Heating oil fell 5.78 cents to finish at $3.0767 per gallon.

• Wholesale gasoline fell 4.88 cents to end at $2.6475 per gallon.

• Natural gas fell 16.5 cents to finish at $3.452 per 1,000 cubic feet.

[Associated Press]

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.