NEW YORK (AP) — Oil hovered around $80 per barrel Monday after new home sales dropped to a six-month low, adding to worries about energy demand in the slowing economy.
The Commerce Department said that sales of new homes fell in August and are on pace for the worst year since the government began keeping records a half century ago. High unemployment and the possibility of another recession are keeping home buyers on the sidelines.
The discouraging government report came as European leaders continued to debate the best way to resolve the months-old debt crisis that could drag down the regional economy. Investors are concerned that Europe's problems could lead to another recession, which would cut demand for oil and gasoline. Demand for gasoline in the U.S. is already below year-ago levels.
Benchmark oil rose 10 cents to $79.95 per barrel in midday trading in New York. Crude has traded between about $79 per barrel and $90 per barrel this month.
It is "just a wild, wild ride now and people are just very nervous at this point," oil trader Stephen Schork said. "I think it's a real concern that we just very well might be in another recession."
Meanwhile Italian energy giant Eni said that Libya has resumed partial oil production for the first time since its civil war erupted in February. About 31,900 barrels of oil per day are being produced. Previously Libya exported about 1.5 million barrels of oil per day, which was less than 2 percent of the world's demand. Some experts say it could take a year or more to get Libyan production back to that level.
More Libyan exports could lead to lower prices for Brent crude as more and more oil is put on the global market, PFGBest analyst Phil Flynn said. That could eventually mean a drop in the price of gas, much of which is refined from Brent.
In London, Brent crude rose 16 cents to $104.13 per barrel on Monday.
In other energy trading, heating oil rose 1 cent to $2.8119 per gallon, gasoline futures rose a penny to $2.5319 per gallon and natural gas rose 8 cents to $3.785 per 1,000 cubic feet.