New York: Oil price dropped on Thursday after International Energy Agency expressed serious concern about the negative impact of higher price on global economy.

Although oil is lower than it was two weeks ago, the International Energy Agency said it remains too high.

The IEA said that even after falling about 10 per cent since May 5, oil is still cutting into household and business incomes around the world.

The agency warned that there's an “urgent need” for additional supplies to be made available to refineries to produce more gasoline, which will help bring down pump prices.

Benchmark West Texas Intermediate crude for June delivery fell USD 1.54 to USD 98.56 per barrel in midday trading on the New York Mercantile Exchange. The June contract ends on Friday, and most trading has already switched to the July contract, which lost USD 1.61 at USD 98.96 per barrel.

Lackluster economic news on Thursday also pushed down crude.

The Philadelphia Federal Reserve reported that its measure manufacturing activities slumped to the lowest reading since October. And the National Association of Realtors said the housing market remains weak as fewer people purchased previously occupied homes in April.

On the positive side, the Labor Department reported that the number of people applying for unemployment benefits fell sharply for the second straight week.

“A little bit of concern” is creeping into oil markets, PFGBEST analyst Phil Flynn said. “We’re back to: ‘Wait, maybe the economy isn’t that great. Maybe we shouldn’t be so hyped-up about demand” possibly increasing later this year.

Meanwhile, retail gasoline prices continue to fall, losing another 2 cents on Thursday to a national average of USD 3.905 per gallon (less than a dollar a liter). A gallon (3.79 liters) of regular is 7 cents higher than a month ago and USD 1.053 more than the same time last year.