Oil Falls Near $80 Ahead of Fed Meeting

Oil prices fell Tuesday on more signs of slowing U.S. and global economies, and the Federal Reserve debated the best ways to energize the recovery.

Benchmark crude fell $1.24 to $80.24 a barrel in midday trading on the New York Mercantile Exchange.

At the pump, the national average for a gallon of unleaded gasoline was $2.781 Tuesday — about 5.5 cents higher than a week ago, according to AAA, Wright Express and Oil Price Information Service. The price is 13.6 cents higher than a year ago.

A new report showed China's import growth fell in July, including a 17.5 percent drop in oil imports, MF Global analyst Andrew Lebow said. Traders often look to China, a big importer of oil, as an indicator of global economic recovery.

In the U.S., the Labor Department said productivity fell in the second quarter. Analysts expected a slight uptick.

The Fed meeting on Tuesday will consider steps to stimulate the U.S. recovery. A statement is expected later in the day.

Meanwhile, the National Hurricane Center is monitoring thunderstorms in the eastern Gulf of Mexico that could become a tropical storm. Another area of disturbed weather lurks out in the Atlantic. Big storms can boost the price of oil and gas on concerns about production and supplies.

The threat of tropical storms is not affecting current oil prices because a premium for the effect of hurricanes is built into the price, PFGBest analyst Phil Flynn said.

"The market has been less concerned because here we are already at Aug. 10 and we really haven't had a storm that's done any major damage down in the gulf," he said. "I know it only takes one and we realize that but really I think the market was pricing in such a monster season that it thinks it can avoid this one storm."

In other Nymex trading in September contracts, heating oil fell 2.57 cents to $2.1281 a gallon, gasoline dropped 2.17 cents to $2.0970 a gallon and natural gas lost 1.7 cents at $4.291 per 1,000 cubic feet.

In London, Brent crude was down $1.49 at $79.50 a barrel on the ICE Futures exchange.

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Associated Press writers Pablo Gorondi in Hungary and Alex Kennedy in Singapore contributed to this report.