NEW YORK (AP) -- Shades of the roiling energy markets that were set off last year by the crisis on Wall Street emerged again Friday with crude seeing the largest percentage drop in prices since January.
The sell-off this time followed troubling news from Dubai, which asked lenders for a six-month reprieve on payments for about $60 billion in debt.
Benchmark crude prices plunged by 7 percent in early trading, though those declines eased as investors weighed the chances that Dubai's problems would spread to Europe, Asia and the United States.
It was partly the fear of frozen credit markets last year that sent crude prices from $147 per barrel in July to about $32 by December.
By midday Friday it was clear that many investors were downplaying the affects of a potential default on big banks.
Still, the jolt to energy markets was a reminder that some investors can be quick to dump assets at the earliest signs of a threat to an economic recovery.
Crude prices bounced off six-week lows as investors digested the news from Dubai.
Benchmark crude for January delivery fell $1.91 to settle at $76.05 on Nymex.
At one point, prices had dropped $5.57, the largest dollar decline since April 20 when crude prices tumbled $4.45 to $45.88.
Any decline in the price of crude would likely help most consumers in the short term because gasoline and other fuel prices tend to follow the direction of oil.
At the pump, retail gas prices fell slightly overnight to a national average of $2.632 a gallon, according to AAA. A gallon of regular unleaded is 5.1 cents cheaper than a month ago and prices have now fallen for a week straight.
The day after the Thanksgiving is usually a very light day on markets and most energy experts said trading next week will be a better indicator for consumers as far as energy prices go.
Dubai has experienced unprecedented growth over the past decade, and the semiautonomous city-state has spent billions on sprawling man-made islands, an indoor ski slope and the world's largest tower.
It's main funding vehicle, Dubai World, said it would ask creditors for a "standstill" on paying back its $60 billion debt until at least May.
That boosted U.S. dollar higher early in the day, which added more downward pressure on oil prices. Crude is bought and sold largely in dollars, so investors holding major currencies pay more to buy oil when the dollar rises.
As anxiety over Dubai eased, the dollar gave up earlier gains and crude prices gained back some ground.
"The strengthening dollar is dislodging a huge amount of speculative capital," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates., adding that energy demand weakness throws yet another wrench into the industry's recovery.
In other Nymex trading, heating oil fell 2.79 cents to $1.9622 a gallon. Gasoline for December delivery dropped 7.14 cents to settle at $1.9262 a gallon. Natural gas for January delivery climbed 2.9 cents to close at $5.192 per 1,000 cubic feet.
In London, Brent crude for January delivery rose 19 cents to settle at $77.18 on the ICE Futures exchange.
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AP writers Barry Hatton in Lisbon and Stephen Wright in Bangkok contributed to this report.
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