AP Energy Writer
NEW YORK (AP) — Energy prices tumbled Thursday after the Federal Reserve predicted that even if the worst of the recession is over, the economy will continue to shrink this year.
Benchmark crude for July delivery fell 99 cents to settle at $61.05 a barrel on the New York Mercantile Exchange. Prices at one point had fallen a penny within $60. In London, Brent prices fell 64 cents to $59.95 a barrel on the ICE Futures exchange.
The ailing economy has pushed energy prices down because consumers and businesses have reduced spending, whether it's on commuting to work or producing goods.
On Thursday, energy prices fell further after the Labor Department reported that there are nearly 6.7 million people filing for unemployment benefits, the highest total on records dating to 1967.
Major industries that rely on natural gas have pulled back and in addition to layoffs, have idled or shuttered factories.
That has led to a steep drop off in natural gas prices and on Thursday, the Energy Department's Energy Information Administration said that last week natural gas in underground storage far exceeded the five-year average. Analysts had expected growth, but not as much as the government reported.
Prices for natural gas on Nymex tumbled 7.5 percent.
That can be good news for consumers, because utilities use a lot of natural gas, meaning bills could come down.
Meanwhile, renewed clashes between government troops and militants in Nigeria, part of a long-standing dispute over the distribution of oil revenues from the Niger Delta, continued to support oil prices.
According to JBC Energy, the situation in the Niger Delta "appears to be worsening." JBC estimated that output in Africa's largest crude exporter was down 900,000 barrels a day since the escalation of militant activity in the summer of 2005.
Nigeria is the fifth largest exporter of oil to the United States and problems there can affect energy prices here.
In other Nymex trading, gasoline for June delivery fell less than a penny to settle at $1.7997 a gallon and heating oil dropped 3.44 cents to $1.5067 a gallon. Natural gas for June delivery slid 31.3 cents to $3.785 per 1,000 cubic feet.
Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy contributed to this report from Singapore.
Copyright 2009 The Associated Press.