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Oil prices fell below $76 a barrel Friday after government figures showed that the United States continues to use less energy than last year.
By early afternoon in Europe, benchmark crude for March delivery was down 29 cents to $75.79 a barrel in electronic trading on the New York Mercantile Exchange.
On Thursday, the contract dropped to $75.66, the lowest price since Dec. 23, before settling at $76.08, down $1.66.
Also hurting oil prices was a tumble in Asian and European stock markets after President Barack Obama proposed tougher bank regulations, which may see less hot money flowing into commodities markets.
“The president’s line of action against the banks’ trading desks and investments in hedge funds will be a concern for the stability of some investment flows in the global market place,” said Olivier Jakob of Petromatrix in Switzerland. “However, it will not happen overnight and will face some very strong lobbying that could water down some of the initial intentions.”
Goldman Sachs and other major banks have helped funnel billions of dollars of speculative money into oil and natural gas contracts during the past several years.
Some analysts said buyers could return to the market if the Nymex contract fell a bit more.
“Market sentiment is bearish as fundamentals remain weak but prices could bounce back if it hits $75. There will be some support at this level,” said Clarence Chu, a trader with Hudson Capital Energy in Singapore.
Energy prices tumbled Thursday after the Energy Information Administration reported that demand for gasoline and jet fuel both weakened during the past few weeks.
America is consuming less petroleum than the same time last year, and refineries, which have struggled to pass higher crude costs along to consumers, are now operating at the lowest levels since September 2008.
“This is the lowest level that refiners have operated at in at least 20 years, with the exception of hurricane-induced shutdowns,” said JBC Energy in Vienna.
Natural gas supplies dropped more than expected to 2.6 trillion cubic feet and are now slightly lower than the five-year average.
“In the big picture, nothing is really changed on the demand side,” said Petromatrix’s Jakob. “It is still not there and the cold weather is not making much of a difference.”
In other Nymex trading in February contracts, heating oil rose 0.26 cent to $1.9882 a gallon, while gasoline rose 0.91 cent to $1.9920 a gallon. Natural gas futures gained 10.6 cents to $5.721 per 1,000 cubic feet.
In London, Brent crude for March delivery fell 20 cents to $74.38 a barrel on the ICE Futures exchange.
Associated Press writer Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.