Oil drops on decline in retail spending

Wednesday, September 14, 2011

Oil prices are tumbling as consumers grow increasingly fearful about the direction of the economy.

The Commerce Department reported Wednesday that consumers spent less on autos, clothing and furniture last month. Consumer spending drives the U.S. economy, and a decline in retail spending suggests Americans also will consume less fuel.

Benchmark West Texas Intermediate crude $1.59 to $88.61 per barrel in New York while Brent crude lost $1.28 to $108.49 in London.

The government also says that oil supplies fell more than twice as much as expected last week while gasoline supplies rose. U.S. supplies were impacted earlier this month as Tropical Storm Lee temporarily shut down oil production in the Gulf of Mexico.

At the pump, retail gasoline prices fell less than a penny to $3.634 per gallon.

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