Californians get some relief at pump
The worst may be over for a while for California motorists as average gasoline prices declined for the second time in the last eight weeks, the Energy Department said Monday. That came on a day in which retail gasoline prices fell nationally for the sixth straight week and analysts predicted that oil could plummet to $35 a barrel before the end of the year.
The average price of a gallon of regular gasoline in California hit $3.14, down 1.3 cents, according to the Energy Information Administration’s weekly survey of filling stations. The national average fell 2.5 cents to $2.552 a gallon.
But most of the energy discussions Monday revolved around oil, as analysts and experts differed greatly over what a three-day slide in oil prices signified about the commodity’s direction in the coming months. Crude oil futures for October delivery dropped $2.33 to $69.71 a barrel after reaching a high for the year last month of $75 a barrel.
In a statement sure to give some businesses a collective anxiety attack, one expert predicted that 2008’s wild swing in crude prices, up to $147.27 a barrel in the summer to less than $35 in December, might become an annual event until regulators finally rein in speculators in energy and other commodity markets.
“Crude oil inventories are way too high compared to demand. A decline in oil futures is long overdue,” said James L. Williams, president of WTRG Economics and publisher of a newsletter called Energy Economist. He said oil could hit $35 a barrel but would not remain there long.
“You could remove this kind of volatility from the markets by setting trading limits,” Williams said.
Other experts were not predicting another roller coaster ride for energy prices but said that indications of a global economic recovery may have been exaggerated. With a glut of oil supplies worldwide, prices of $70 to $75 a barrel were not sustainable, they said.
Phil Flynn, senior market analyst at PFG Best Research in Chicago, said that news that oil demand in China was low because of an oversupply could help drive oil prices back down to $60 a barrel.
Fadel Gheit, senior energy analyst with Oppenheimer & Co., called the day’s trading part of a normal correction to the $60 level dictated by supply and demand. “Oil prices are still inflated beyond what they should be,” Gheit said.
John Kilduff, vice president of risk management at MF Global, had still another take: Investors were pulling back to await the outcome of this week’s Group of 20 gathering of finance ministers of the world’s largest economies and to see whether the Federal Reserve would be changing its policy.
“This rally got a little long in the tooth, and you’re seeing some profit-taking today. That’s all,” Kilduff said.
--
More to Read
