BUSINESS
03/01/2013 11:43 EST | Updated 05/01/2013 05:12 EDT

Oil prices fall below $91 as US spending cuts loom, China manufacturing slows

NEW YORK, N.Y. - The price of oil fell to its lowest level of the year on Friday amid worrisome economic developments in the world's two largest oil-consuming countries.

The prospect of U.S. government spending cuts raised concerns about oil demand in the world's leading economy, while China's manufacturing grew at its weakest rate in five months in February.

By late morning in New York, benchmark West Texas Intermediate crude for April delivery was down $1.19 to US$90.86 a barrel. Earlier, it hit a low for 2013 of $90.44.

While there have been signs of an improving U.S. economy in recent weeks, attention Friday was focused on the increasing likelihood that about $85 billion in spending cuts could start taking effect later in the day as part of an earlier budget agreement between the White House and Congress.

The International Monetary Fund has predicted that the spending cuts could reduce U.S. growth by some 0.5 percentage points in 2013.

In China two surveys showed that manufacturing growth slowed last month as demand faltered and factories shut down for the Lunar New Year holiday.

Brent crude, used to price many kinds of oil imported by U.S. refineries, was down 71 cents at US$110.67 a barrel on the ICE Futures exchange In London. That's close to Brent's low for the year.

In other energy futures trading on the Nymex, wholesale gasoline fell one cent to US$3.10 a U.S. gallon (3.79 litres), heating oil lost two cents to US$2.93 a gallon and natural gas rose two cents to $3.50 per 1,000 cubic feet.

(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS.UN), (TSX:CVE)