NEW YORK, N.Y. - The price of oil hit an eight-month low Thursday as hopes dimmed for a solution to Europe's financial crisis.

Benchmark U.S. crude lost $2.52, or 3.1 per cent, to end at US$77.69 per barrel in New York. That's the lowest price since Oct. 4. Oil traders also took their cue from U.S. stock markets, which were sharply lower for most of the day.

Declining oil prices hold the promise of lower pump prices for drivers. The U.S. average has dropped nearly 57 cents in less than three months and is now $3.369 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Gas hasn't been this cheap since Jan. 7. Oil has dropped about 25 per cent since May 1.

In Canada, the price at the pump averaged C$1.226 per litre, down from $1.266 a month ago, according to GasBuddy.com.

As European leaders met in Brussels to discuss new ideas for dealing with the region's yawning debts, there were sharp divisions over the steps needed to stimulate growth in the eurozone, a region that consumes about 16 per cent of the world's oil. That left analysts fearing more of the same in the three-year-old crisis.

"We're back to the same old worries that the Europeans aren't going to do anything to resolve their debt crisis," said Gene McGillian, a broker and oil analyst at Tradition Energy.

Meanwhile, natural gas futures fell 2.7 per cent as a government report showed U.S. supplies remain unusually high. The Energy Information Administration said supplies grew by 57 billion cubic feet to about 3.06 trillion cubic feet last week. That's more than the 51 billion to 55 billion cubic feet that analysts were predicting. The U.S. supply is about 25 per cent higher than average for this time of year, the government said.

Natural gas futures fell by 7.6 cents to end at US$2.722 per 1,000 cubic feet in New York. Natural gas is less than a quarter of what it cost in 2008 and 38 per cent cheaper than at the same time last year.

Analysts say traders decided to lock in profits after prices had jumped in the past several weeks. Natural gas had risen 45.5 per cent since April when it hit a 10-year low at $1.91.

"We've had a tremendous run," Schork said. "The bulls are exhausted right now."

Utilities will use some of that supply as Americans try to stay cool in the coming days. Temperatures topped 40 degrees Celsius across the central Midwest and Great Plains on Thursday. A heat wave is expected to roast much of the country with record-breaking temperatures this weekend and next week.

In other futures trading, heating oil lost 1.72 cents to end at $2.5937 per gallon while wholesale gasoline lost 2.11 cents to $2.5993 per gallon.

Brent crude, which is used to price oil imported into the U.S., fell by $2.14 to finish at $91.36 per barrel in London.

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News from © The Associated Press, 2012