By PABLO GORONDIAssociated Press
The price of oil slipped closer to $79 a barrel Tuesday amid a broad decline in global financial markets as investors worried that an EU summit this week will fall fail to provide solutions to Europe's debt and economic problems.
By midday in Europe, benchmark oil for August delivery was down 10 cents at $79.11 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 55 cents to settle at $79.21 in New York on Monday. It has fallen from $106 early last month as signs of a global economic slowdown mounted.
In London, Brent crude for August delivery was up 42 cents at $91.43 per barrel on the ICE Futures exchange.
Analysts said supply risks were helping lift the Brent contract, while Tropical Storm Debby tropical was moving away Gulf of Mexico, reducing the chances for a sustained disruption in U.S. supplies.
"U.S. oil and gas production in the Gulf of Mexico is beginning again," said a report from Commerzbank in Frankfurt. "The impact of tropical storm Debby on the supply of oil in the U.S. should be only moderate."
Oil traders often look to stock markets as a barometer of overall investor sentiment, and the Dow Jones industrial average fell 1.1 percent Monday. Most Asian and European stock markets were lower Tuesday.
Markets have mostly fallen this week amid investor skepticism that European leaders will be able to quickly resolve the region's debt and economic woes. A European Union summit later this week will address a stimulus proposal to help spur growth. Greece, meanwhile, is trying to water down the austerity measures that were a condition of its international bailout.
"The weakening financial markets look like a no confidence vote in the ability of the EU summit to successfully address Greek bailout concerns," energy trader and consultant Ritterbusch and Associates said in a report. "The unresolved euro debt crisis is the primary driver of lower oil prices."
In other energy trading, heating oil was up 1.28 cents at $2.5476 per gallon while gasoline futures gained 1.94 cents at $2.5176 per gallon. Natural gas added 0.7 cent at $2.701 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.
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