NEW YORK (AP) — The price of oil slid again Friday on the prospect of a tighter supply of cash and slower growth in China.
U.S. benchmark crude fell $1.71, to $93.69 in New York. The decline extends a sharp plunge that saw U.S. oil fall from nearly $100 per barrel in morning trading Thursday.
Brent crude, which is used to price oil used by many U.S. refineries to make gasoline, fell $1.24 to $100.91.
The average retail price of gasoline fell a penny to $3.59 per gallon according to AAA, OPIS and Wright Express. Gasoline prices have fallen slowly over the past week, but remain 12 cents higher than last year.
Crude had reached its highest level of the year by Thursday with the war in Syria threatening wider violence across the Middle East, as well as expectations that the rebounding global economy would increase energy demand.
Economic policies that have increased the supply of cash in the market have also made commodities such as oil attractive.
But Thursday, the U.S. Federal Reserve said it could start tapering its bond purchases this year, which would reduce the amount of cash pushed into the market. That would make it more expensive for traders to invest in oil.
New reports of a lending crunch in China, the world's second largest economy, and weak manufacturing data there may also ease energy demand.
The sudden drop in the price of oil revealed how susceptible the oil market is to external influences outside of supply and demand. "There has after all been no change in the fundamentals since the beginning of the month," Commerzbank in Frankfurt noted in in a published report.
Analysts do not expect oil prices to decline much further, however. Geopolitical risks remain, and OPEC has signaled it will lower oil production in the coming months, which would reduce global supplies and prevent a further drop in prices.
"The geopolitical premium must not be forgotten, and may not remain muted for long," said analysts at Credit Agricole CIB in Hong Kong.
In other energy futures trading on the Nymex:
— Wholesale gasoline fell 3 cents to $2.75 a gallon.
— Heating oil fell 3 cents to $2.84 per gallon.
— Natural gas fell 11 cents to $3.77 per 1,000 cubic feet.
AP writers Pablo Gorondi in Budapest and Pamela Sampson in Bangkok contributed to this report.