Oil falls below $74 a barrel as summer driving season ends

U.S. oil prices slipped below $74 a barrel Monday as the end of the U.S. driving season and high levels of unemployment in the world’s biggest oil consumer raised concerns over the outlook for demand.

The Labor Day holiday, which marks the traditional end of American summer holidays when gasoline demand peaks, kept volume low in many markets.

The New York Mercantile Exchange, home to benchmark U.S. crude futures also known as West Texas Intermediate, will combine trades from Sunday, Monday and Tuesday into one trading session, with a single settlement at Tuesday’s close.

U.S. crude for October delivery was down 65 cents at $73.95 a barrel Monday.

“The U.S. [oil futures] complex is coming under considerable pressure from the end of the driving season and the high inventory levels, while bearish employment data continues to undermine hopes of economic recovery,” said David Wech, head of energy studies at consultant JBC Energy in Vienna.

“I don’t see any immediate signs of an upside. All the fundamental factors look very weak,” Wech added.

Although U.S. gasoline demand accounts for more than 10% of the world’s oil use, U.S. refiners are set to cut the amount of crude they process in coming weeks as they enter autumn maintenance, in preparation for cranking up output of winter fuels.

U.S. crude has traded between $64.24 and $87.15 a barrel this year, posting its high in early May and the low later that month as the European credit crisis rattled markets.

Prices have mostly stayed between $70 and $80 a barrel, a range that OPEC producers say is high enough to foster investment in capacity expansion and low enough to sustain economic recovery.