02/18/2013 08:55 EST | Updated 04/20/2013 05:12 EDT

Oil Prices Drop Below $96 A Barrel Amid Concerns Over European, US Economies

isolated oil pump in action at...

The price of oil hovered below US$96 a barrel Monday, weighed down by data released late last week which showed that U.S. industrial production weakened and that Europe remained mired in recession.

By early afternoon in Europe, benchmark West Texas Intermediate crude for March delivery was down 17 cents a US$95.69 a barrel in electronic trading on the New York Mercantile Exchange. The contract had fallen $1.45 on Friday.

Trading volume was lower than usual as floor trading, like U.S. financial markets, was closed for the Presidents Day holiday.

Investor sentiment has been subdued since the Federal Reserve said Friday that U.S. factory production slowed in January, mostly because of a big drop in output at auto factories.

Most analysts think the slowdown is temporary, but it was enough to raise concern about the still-sluggish economic recovery.

Traders were also concerned about a deepening recession across the economy of the 17 countries that use the euro. Their combined economic output shrank by 0.6 per cent in the final quarter of 2012 from the previous three-month period. The decline was bigger than the 0.4 per cent drop expected and the steepest fall since 2009.

Brent crude, used to price many international varieties of oil, was down one cent at US$117.65 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex, heating oil fell 0.34 of a cent to US$3.2070 a U.S. gallon (3.79 litres), wholesale gasoline rose 0.47 of a cent to US$3.3185 a gallon and natural gas added 0.2 of a cent to $3.155 per 1,000 cubic feet.