NEW YORK – Oil dropped below $101 per barrel Wednesday on discouraging economic news, as U.S. manufacturing growth slowed and an industry group said private employers added the fewest jobs since September.
Benchmark West Texas Intermediate crude for July delivery lost $2.01, or 2 percent, at $100.69 per barrel on the New York Mercantile Exchange. In London, Brent crude fell $1.87 $114.86 per barrel on the ICE Futures exchange.
Prices have wavered around $100 per barrel during the past few weeks. Oil hit the highest level since 2008 in April, but declining gasoline consumption and reports of a weakening jobs market pushed prices down.
Payroll processor ADP added to those concerns Wednesday. The group said private employers created just 38,000 jobs in May, down from 177,000 in April. That’s the weakest number since September. The government unemployment report for May is due out Friday.
For the next few weeks, investors and energy economists will keep a close eye on how much Americans are driving. U.S. highways are usually filled with vacationers during the summer, but analysts think travel will be impacted this year as soaring fuel prices squeeze family budgets.
«Summer is a real boom time for energy markets,» said Michael Lynch, president of Strategic Energy & Economic Research. This year though he said a lot of people may want to keep their cars at home. «And I’m not sure if gas prices dropping from $4 to $3 per gallon is going to convince them to hop back in the car,» Lynch added.
The latest data on retail gas demand will come from a MasterCard SpendingPulse survey that’s expected Wednesday. Previous SpendingPulse surveys show a nine-week decline in U.S. gasoline consumption.
Consumers also may be dealing with higher gasoline prices in other ways.
Oil analyst Stephen Schork noted that Bureau of Economic Analysis data show that sales of used cars rose in April while sales of new cars declined. «Consumers are likely scaling back on new cars and putting that money towards their gasoline bills,» Schork said.
Carmakers release May sales figures Wednesday. Both GM and Ford reported lower sales overall. Analysts expect total U.S. auto sales to fall 4 percent compared to a year ago.
Meanwhile, gasoline prices continue to drop. The national average declined for the 20th day to $3.775 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 17.7 cents cheaper than it was a month ago, but it’s still $1.05 higher than the same time last year.
In other Nymex trading for July contracts, heating oil gave up 4 cents at $3.0177 per gallon and gasoline futures fell 6 cents to $2.9905 per gallon. Natural gas lost 3 cents at $4.633 per 1,000 cubic feet.