Oil falls below $120
Prices at the gasoline pump came down again yesterday in the Philadelphia area, and another big drop in crude-oil futures means motorists could see the price break continue.
Prices at the gasoline pump came down again yesterday in the Philadelphia area, and another big drop in crude-oil futures means motorists could see the price break continue.
The average price for regular-grade gas fell a penny from Monday - to $3.92 a gallon in Philadelphia and the four suburban counties in Pennsylvania and to $3.72 in the three South Jersey suburban counties, according to AAA Mid-Atlantic.
The cumulative drop over the last month amounts to a significant savings for drivers - 23 cents a gallon in the five Pennsylvania counties, and 24 cents in the three South Jersey counties.
Catherine L. Rossi, a spokeswoman for AAA Mid-Atlantic in Wilmington, said the auto club believed the national average would fall to $3.75 a gallon by Labor Day from $3.87 yesterday.
"A larger drop could be in store if oil prices drop even more," Rossi said. That could occur if the dollar continues to strengthen against major foreign currencies and if the current hurricane season in the Gulf Coast oil-drilling area is tame, she said.
Oil traders sent crude prices tumbling as low as $118 a barrel yesterday on the growing belief that a U.S. economic slowdown and high energy costs are curbing consumer demand for gasoline and other petroleum products.
A day after plunging nearly $4 a barrel in a dramatic sell-off, crude continued its downward trend.
Light, sweet crude for September delivery fell $2.24 yesterday to settle at $119.17 a barrel on the New York Mercantile Exchange, the lowest close since May 2. During the day's trading, the contract dipped to $118 - nearly $30 below the trading high of $147.27 reached July 11.
"The market psychology has finally shifted," said Stephen Schork, an analyst and trader in Villanova, Pa. "$4-a-gallon gasoline has clearly killed demand."
But there are factors that could keep oil from descending further, said Mike Fitzpatrick, vice president of energy and risk management at MF Global Ltd. Those include political tensions in Nigeria and the Middle East, the potential for a big hurricane along the Gulf Coast that disrupts production, and global demand that is still growing - just not at the same pace that it had been.
The dollar's six-week highs against the euro contributed to oil's decline yesterday. The euro fell to $1.5464 from the $1.5587 it bought late in New York trading Monday, making oil and other commodities less attractive to investors seeking a hedge against inflation and dollar weakness.
