Oil falls on concern about German economy

NEW YORK — Oil fell Tuesday on concerns about Europe’s biggest economy.

Benchmark West Texas Intermediate crude for September delivery gave up 64 cents at $87.23 per barrel in midday trading on the New York Mercantile Exchange. Brent crude, which is used to price many international oil varieties, fell 26 cents to $109.58 per barrel on the ICE Futures exchange in London.

Oil dropped early in the day after Germany said its economy nearly ground to a halt in the second quarter, growing only 0.1 percent from April to June.

Germany’s economic struggles raise a number of concerns for investors. As Europe’s largest economy, Germany is the strongest member within the European Union. Sluggish growth in Germany impacts the EU’s ability to prop up weaker countries with financial aid. That means European credit troubles could spread to other countries.

Europe consumes more than 17 percent of the world’s oil, so a slowdown could impact world oil demand.

“If Europe weakens further, we could be talking about a recession in the eurozone,” independent analyst Jim Ritterbusch said. “That means a stronger dollar, and when that happens, it’s usually bearish for oil.”

Oil, which is priced in U.S. currency, tends to fall as the dollar rises and makes crude more expensive for investors using foreign money.

Germany’s economic report was worse than expected and overshadowed news of resurgent factory output in the U.S. The Federal Reserve said that U.S. industrial production grew in July at the fastest rate of the year.

Meanwhile, gasoline pump prices fell nearly a penny to a national average of $3.587 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is about 9 cents cheaper than it was a month ago, but it’s still almost 84 cents more than the same time last year.

In other Nymex trading for September contracts, heating oil was virtually unchanged at $2.9465 per gallon and gasoline futures fell less than a penny to $2.8627 per gallon. Natural gas dropped 7 cents to $3.953 per 1,000 cubic feet.