Oil prices plummeted Tuesday as ebbing consumer confidence in the economic recovery set off concerns about gasoline demand for the busy summer season.
Benchmark crude oil fell $2.31, or 3 percent, to settle at $75.94 on the New York Mercantile Exchange. Gasoline and other energy prices also retreated.
Prices earlier fell in Asia on concerns of an economic slowdown in China. The selling picked up steam in New York after a closely watched measure of consumers' sentiment about the economy had its sharpest decline since February.
On the plus side, falling oil prices could lead to a discount at the pump for drivers before the July 4th holiday weekend, said PFGBest analyst Phil Flynn.
"With the crude oil getting slammed and the consumer confidence number, you put those two together that doesn't bode well for gasoline demand over this holiday weekend," he said.
The Consumer Conference Board, a private research group, said its June Consumer Confidence index tumbled 10 points, as Americans continued to worry about jobs and the slow economic recovery. The index now stands at 52.9. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth.
Economists watch the number closely because consumer spending, including health care and other major items, accounts for about 70 percent of U.S. economic activity.
The Dow Jones industrial average fell about 280 points in afternoon trading to drop below 10,000 for the first time since June 10. The Dow and other major indexes each lost more than 2 percent.
In the past month, oil prices have risen from about $64 a barrel to range between $75 a barrel and $78 a barrel, mirroring the ups and downs of the equities markets and the European currency.
The national average for retail gasoline prices fell 0.1 cent to $2.755 a gallon Tuesday, according to Wright Express and Oil Price Information Service. That's an increase of 11.6 cents from a year ago.
In other Nymex trading in July contracts, heating oil fell 7.2 cents to settle at $2.0213 a gallon and gasoline dropped 6.56 cents to $2.0720 a gallon. August natural gas lost 18.5 cents, or 3.9 percent, to $4.548 per 1,000 cubic feet.
In London, Brent crude fell $2.15 to $75.44 a barrel on the ICE futures exchange.
Associated Press writer Alex Kennedy in Singapore and Pablo Gorondi in Hungary contributed to this report.
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