Oil markets looking for signs of relief
The AAA says gas prices could drop below $4 a gallon soon.
NEW YORK — Prices at the pump pulled back from record highs Friday as another slide in oil capped crude’s biggest one-week drop in more than three years.
Gasoline dropped by nearly a penny at filling stations across the country. If crude prices hold at current levels or head even lower, drivers may see further relief at the pump in the coming days.
Is it time to declare the energy bubble over? Experts aren’t ready to go that far just yet. Oil has bounced back repeatedly from big drops and oil prices continued to erase record highs this year.
But sentiments are shifting. Experts who just days ago thought the market’s meteoric run still had legs are growing cautious. Some say last Friday’s high above $147 a barrel may be the last record the market sees — for now.
“If this is not the bubble’s implosion, then it’s a reasonable facsimile,” analyst and trader Stephen Schork said in his daily market commentary. “Perhaps all we have witnessed was a replay of last August’s subprime-induced sell-off. Time will tell. Nevertheless, for the time being we no longer care to hold a bullish view.”
Oil’s drop may have an immediate effect, as gas station owners desperate to get drivers back to the pump consider a pre-emptive cut in price.
The price for a gallon of regular fell to $4.105, down nearly a penny, according to AAA, the Oil Price Information Service and Wright Express. Diesel prices also eased, dipping three-tenths of a cent to $4.842 a gallon.
In the Mahoning Valley, the average price Friday was $4.023, down 2 cents from the day before, the AAA said. It said a record was reached Tuesday when prices averaged $4.056 locally.
“We could see the nationwide average drop down to $4 or perhaps lower than that. And we think that could happen relatively quickly ... within the next couple of weeks,” said Geoff Sundstrom, a spokesman for auto club AAA.
Light, sweet crude for August delivery fell 41 cents to settle at $128.88 a barrel on the New York Mercantile Exchange.
The drop in gas prices wasn’t much of a surprise, considering that a barrel of oil is now more than 10 percent cheaper than it was at the start of the week. Perhaps more stunning is the market’s inability to spark a larger rally.
But consumers have been jolted repeatedly by unheard-of gas prices, and immense changes in how consumers, particularly American consumers live are already in motion.
Car buyers have been fleeing to more fuel-efficient models as gas prices have climbed beyond $4 per gallon. U.S. sales of pickups and sport-utility vehicles are down nearly 18 percent this year through June, while sales of small cars are up more than 10 percent.
While slashing production of more-profitable trucks and sport-utility vehicles, automakers have been scurrying to build their most fuel-efficient models faster. Toyota Motor Corp., which hasn’t been able to keep up with demand for its 46-miles-per-gallon Prius hybrid, said last week that it will start producing the Prius in the U.S. and suspend truck and SUV production to meet changing consumer demands.