Oil drops below $93 on unemployment claims data

NEW YORK (AP) -- The price of oil dropped sharply for a second day after the government said the number of people seeking unemployment aid in the U.S. reached a four-month high.

At midday in New York, benchmark oil for May delivery was down $1.80, about 2 percent, to $92.65 a barrel. Oil hadn't dropped below $93 a barrel in two weeks. It fell $2.74, or 2.8 percent, on Wednesday. That was the biggest one-day decline since November.

The number of Americans seeking unemployment benefits rose last week by 28,000, the third straight increase, according to the Labor Department. Weekly applications increased to a seasonally adjusted 385,000. That's the highest level since late November.

Applications are a proxy for layoffs, so any indication that fewer people are making the daily commute can be interpreted as a sign of lower demand for gasoline as well.

Oil prices also fell back because of the stronger dollar, which makes crude more expensive and a less attractive investment for traders using other currencies.

The dollar has risen partly because of a big drop in the yen after the Bank of Japan announced an aggressive monetary easing campaign. Looser monetary policy tends to weaken a country's currency. The dollar rose to 96.06 yen, up more than 3 percent from 92.84 yen Wednesday.

Wholesale gasoline futures fell 1 cent to $2.90 a gallon and have dropped about 7 percent so far this week. Phil Flynn, senior market analyst at Price Futures Group, wrote in a daily report that he believes the decline will put American drivers "in much better shape as we head into this summer driving season."

The average price for a gallon of gas is $3.64, according to AAA. That's 29 cents below a year ago, when gas peaked at $3.94 on April 6. AAA said this week that it expects the average price of gas this year to be below last year's $3.63 a gallon because of increased domestic production and continued low demand. Gas rose 34 cents in the first quarter of this year, compared with a jump of 65 cents in the first quarter of 2012.

Brent crude, used to price many kinds of oil imported by U.S. refineries, fell $1.27 to $105.84 per barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex:

— Heating oil fell 5 cents to $2.95 a gallon.

— Natural gas rose 4 cents to $3.94 per 1,000 cubic feet.

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Pamela Sampson in Bangkok and Pablo Gorondi in Budapest contributed to this report.