Falling crude prices raise uncertainty about gas costs
NEW YORK - As energy prices surged this month, economists told motorists to brace for the return of $3-a-gallon gas.
But that’s hardly a guarantee, especially after a three-day sell-off that pushed oil and gas prices to their lowest levels of the year.
“If oil prices have peaked, maybe $3 isn’t a foregone conclusion,’’ PFGBest analyst Phil Flynn said.
Energy prices rallied this winter as frigid temperatures blanketed parts of the country. China also said last week that it increased oil imports by nearly 14 percent in 2009, fueling expectations that world oil demand will continue to grow.
Crude, which jumped to a 15-month high on Monday, tugged retail gas prices higher as well. Pump prices increased again by less than a penny to a new national average of $2.75 a gallon, according to AAA. A gallon of regular unleaded is 15.4 cents more expensive than last month and 96.7 cents more expensive than a year ago.
But oil prices started falling this week as temperatures warmed up and China said it would try to cool bank lending. An Energy Information Administration report pushed prices even lower yesterday. The EIA said the nation’s oil supply swelled by 3.7 million barrels last week, above the average for this time of year. Gasoline supplies grew by 3.8 million barrels.
US demand also fell by nearly 1 percentage point from last year, showing the country has an even smaller appetite for energy now than during the recession. Benchmark crude for February delivery fell $1.14 to $79.65 a barrel on the New York Mercantile Exchange. Crude fell as low as $78.37 earlier in the day.
In other Nymex trading in February contracts, heating oil fell 3.72 cents to $2.0946 a gallon and gasoline dropped 3.76 cents to $2.0602 a gallon.