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Originally published Sunday, June 24, 2012 at 10:07 PM

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Oil near $79 as Europe woes offset supply threat

Oil fell to near $79 a barrel Monday in Asia as Europe's economic woes offset a supply disruption from a storm that shut down about a quarter of crude output in the Gulf of Mexico.

Associated Press

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SINGAPORE —

Oil fell to near $79 a barrel Monday in Asia as Europe's economic woes offset a supply disruption from a storm that shut down about a quarter of crude output in the Gulf of Mexico.

Benchmark oil for August delivery was down 38 cents at $79.38 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.56 to settle at $79.76 in New York on Friday.

In London, Brent crude for August delivery was down 60 cents at $90.38 per barrel on the ICE Futures exchange.

Tropical Storm Debby, with top sustained winds of about 60 mph (95 kph), is lashing Florida and Alabama with heavy rains and is expected to come ashore later this week over the Florida Panhandle. As of Sunday morning, 23 percent of oil and gas production in the Gulf region had been suspended, according to a government hurricane response team. Employees have been evacuated from 13 drilling rigs and 61 production platforms in the Gulf.

Analysts said any supply disruption should be brief since the storm was not expected to significantly damage oil facilities.

Investors will also be closely watching a European Union summit this week where the leaders the leaders of France, Germany, Italy and Spain have agreed to push for a growth package worth up to $163 billion to spur the region's weak economy.

Crude has plunged from $106 less than two months ago amid signs of slowing economic growth and oil demand in the U.S., Europe and China. Capital Economics said it expects Brent crude to fall to as low as $70 during the next 18 months.

"The main downside risk to oil prices comes from the crisis in the euro-zone, which we do expect to worsen," Capital Economics said in a report. "However, after such precipitate declines in oil prices, it would not be surprising to see a small, albeit temporary, bounce."

In other energy trading, heating oil was down 1.1 cents at $2.52 per gallon while gasoline futures gained 0.3 cent at $2.47 per gallon.

Natural gas jumped 5.2 cents at $2.68 per 1,000 cubic feet

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