Oil prices likely to fall in coming weeks
NEW YORK - This week's scary stock market plunge has a silver lining: Gasoline is about to get cheaper. That's because the same fears that forced a sell-off on Wall Street also brought down the price of oil. Gas prices usually fall in late summer as families take fewer road trips. But the recent drop in oil should lower them more. Forecasters say the national average of $3.70 per gallon could fall as much as 35 cents per gallon over the next month. American motorists consume roughly 378 million gallons of gasoline per day, so a 35-cent-per-gallon fall would reduce daily gas spending by about $132.3 million.Rod Kirgis, 56, of Grandville, Mich., said he can't wait for gas to come down. Prices in his state are above the national average, rising two cents to $3.83 on Friday "It's been quite a strain on our family," he said. Kirgis, an engineer who pays about $136 per week to commute 50 miles to his office, said he's had to cut back home repairs and sporting events and to help pay his gasoline bill this year. Prices should come down a bit each day for motorists. "They'll see a penny or two drop per day next week," said Patrick DeHaan, senior petroleum analyst at GasBuddy.com, a consumer Web site that tracks retail gasoline prices around the country.DeHaan said the decline will likely start at stations along highways and other busy areas. Those stations need to replenish their storage tanks every day or so, and they'll get the cheaper gasoline faster than others. Of course, an unexpected surge in oil could drive prices higher again. But traders say it would take a calamity like a hurricane in the crude-producing waters of the Gulf of Mexico to really boost oil markets now. Benchmark West Texas Intermediate crude has declined $12.71, about 13 percent, in the last 10 days. A drop in oil on Thursday outpaced a similar tumble in stocks, losing nearly 6 percent, its biggest one-day decline in three months. Oil ended the week at $86.88 per barrel on the New York Mercantile Exchange, a $8.82 drop from the week before. Prices tumbled as a series of weak economic data rolled in. The U.S. said the economy grew only 1.3 percent in the second quarter, while manufacturing reports pointed to weaker activity in the U.S. and China. The U.S. debt ceiling debate ended with plans to cut spending by $2.4 trillion over the next decade, while Europe continued to struggles with enormous debt. Another recession, investors feared, could be right around the corner. "There's just a lot of pessimism out there now," Andrew Lebow, a senior vice president and oil broker at MF Global. A decline in the U.S. unemployment rate to 9.1 percent was one bright spot on Friday. Brent crude, which is used to price many international varieties, also climbed $2.12 to settle at $109.37 per barrel on the ICE Futures Exchange in London. That wasn't because of an expectation for increased oil demand, however. An oil pipeline exploded in Iran, potentially impacting oil supplies for the world's third-largest oil exporter. The cause of the blast is still under investigation. In other Nymex trading for September contracts, heating oil added 4.78 cents to $2.9417 per gallon and gasoline futures rose 6.8 cents to settle at $2.8052 per gallon. Natural gas was unchanged, settling at $3.941 per 1,000 cubic feet.