NEW YORK — Oil prices dropped Thursday to the lowest level in a month after a government report showed the United States continues to use less energy than last year, raising doubts about the strength of the fragile economic recovery.
A proposal by President Barack Obama for tougher bank regulations also pulled the stock market sharply lower and left traders wondering how it would affect commodities markets. 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.
Obama's call to limit speculation by commercial banks could make it more expensive for them to buy oil contracts, hedge fund manager Mike Masters said. Masters, who called for tighter scrutiny of energy markets last year, cheered Obama's announcement.
"If you can reduce the impact of banks in commodities, you're going to have much less volatility in food and energy prices," Masters said.
Benchmark crude for March delivery fell $1.66 to settle at $76.08 a barrel on the New York Mercantile Exchange. The contract dropped as low as $75.66 earlier in the day, the lowest price since Dec. 23.
Energy prices dropped in morning trading 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.
Natural gas supplies dropped more than expected to 2.6 trillion cubic feet and are now slightly lower than the five-year average.
The Labor Department also said Thursday that initial claims for unemployment insurance rose last week by 36,000 to a seasonally adjusted 482,000.
In other Nymex trading in February contracts, heating oil lost 3.55 cents to settle at $1.9856 a gallon, while gasoline dropped 6.36 cents to settle at $1.9829 a gallon. Natural gas futures gained 11.9 cents to settle at $5.615 per 1,000 cubic feet.
In London, Brent crude for March delivery lost $1.74 to settle at $74.58 a barrel on the ICE Futures exchange. (AP)