Oil Prices Fall on US Economic Worries

Oil prices fell Monday as concerns about the U.S. economy overrode expectations of increased fuel demand resulting from a winter storm in the United States.

Prices initially opened higher in response to the wintry conditions over the weekend in the eastern half of the United States.

Victor Shum, an energy analyst with Purvin & Gertz in Singapore noted that the "storm will stir heating oil use, and these expectations have temporarily overtaken worries about the state of the U.S. economy," he said.

But by afternoon in Europe, light sweet crude for January delivery had shed 85 cents to $90.42 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude fell 41 cents, going for $91.27 a barrel on London's ICE Futures exchange.

Worries about the state of the U.S. economy already affected the market Friday, when the contract fell 98 cents after Washington reported inflation jumped in November by the largest amount in more than two years.

Energy traders are concerned that rising inflation will cut consumers' buying power and reduce demand for gasoline and oil. They also worry that higher inflation means the Federal Reserve will stop cutting interest rates. Many analysts cite the Fed's recent rate-cutting campaign, and its role in depressing the value of the dollar, as a major factor behind oil's rise in November to a record above $99 a barrel.

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