The price of benchmark U.S. oil fell by 2 percent Thursday following a sharp decline on the stock market.
Benchmark oil for August delivery was down $1.74 to $78.47 in late morning trading on the New York Mercantile Exchange.
Stocks dropped sharply after the Supreme Court upheld the central provision of President Barack Obama's health care overhaul, a requirement that almost all Americans carry health insurance. Stocks of major insurance companies fell sharply as analysts sorted through the ruling.
In Europe, expectations for the two-day EU summit beginning Thursday were low, especially as hopes for a deal on the joint issue of eurobonds faded following recent comments from German Chancellor Angela Merkel. In a raft of comments this week, Merkel has reiterated her opposition to the idea that is backed by the likes of France, Italy and Spain.
Crude has plummeted from $106 early last month on expectations weak global economic growth will drag down oil demand. Some analysts expect crude to hover near $80 until U.S. demand picks up.
Signs of a weakening Chinese economy have also dragged oil prices lower. Citigroup estimates China will account for about half of global oil consumption growth this year.