Oil prices fall back to February levels amid concerns over global recovery and weak demand

Oil settles below $72 as stock markets slide

Oil prices have dropped to levels not seen since February.

Crude tumbled with the stock market Friday, as investors worried that European economies would slow down and hurt the global economic recovery. The Dow Jones Industrial Average lost 163.79 points, or 1.5 percent, to close at 10,620.16. The NASDAQ and the S&P 500 were each off about 2 percent.

Benchmark crude for June delivery lost $2.79, almost 4 percent, to settle at $71.61 a barrel on the New York Mercantile Exchange. That’s down about 18 percent from an intraday high of $87.15 a barrel on May 3, an 18-month peak. Friday’s settlement price is the lowest since crude settled at $71.19 on Feb. 5.

Analysts expect oil prices will fluctuate for months in a volatile market created by plentiful oil supplies, sluggish demand and European financial woes that have weakened the euro and strengthened the dollar. Oil, like most commodities, is priced in dollars. A stronger dollar makes crude more expensive for overseas traders holding other currencies.

“We’re going to see this type of price movement where we’ll spend several months clawing our way up 10 or 15 dollars and then in two or three weeks, we’ll give it all of it back again,” analyst Jim Ritterbusch of Ritterbusch and Associates said Friday.

The Energy Department said this week that crude supplies in the U.S. rose by almost 2 million barrels and were well above the average range for this time of year.

“The specter of large crude oil inventories seems to be weighing on markets much more than before, and has been instrumental in pressuring prices,” Edward Meir, senior commodity analyst at MF Global in New York stated.

The oil spill in the Gulf of Mexico gushing 200,000 barrels a day has so far not affected oil prices, according to analysts. It has not interfered with tankers carrying imported crude to Gulf ports or those taking refined products from there to other parts of the country. There is concern though that the spill could eventually slow shipments if vessels must be scrubbed of oil before they reach port.

Motorists continue to benefit from falling oil prices, as retail gasoline prices dropped across the country. The national average at the pump fell a little more than half a cent overnight to $2.88 a gallon. That’s about four cents lower than a week ago and 60.2 cents higher than a year ago.

In other Nymex trading in June contracts, heating oil fell 7.13 cents to settle at $2.0606 a gallon, and gasoline lost 6.43 cents to settle at $2.1308 a gallon. Natural gas was down 2.7 cents to settle at $4.312 per 1,000 cubic feet.

In London, June Brent crude lost $2.93 to settle at $77.18 on the ICE futures exchange.

Associated Press writer Alex Kennedy in Singapore and Pablo Gorondi in Budapest contributed to this report.

(This version CORRECTS May 3 oil price in 3rd graf to intraday high, sted settlement.)