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Archive for Wednesday, September 7, 2005

Oil, gas prices fall as recovery begins

September 7, 2005

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— The gradual recovery of some Gulf Coast petroleum operations hobbled by Hurricane Katrina helped send oil futures sharply lower Tuesday and analysts predicted that pump prices, now averaging more than $3 a gallon, would decline slightly.

But another financial pinch shaping up for U.S. consumers and businesses in the months ahead is the high price of natural gas, analysts and industry officials said. And with oil prices still trading close to $66 a barrel, European and Asian economic leaders warned Tuesday that their growth was likely to slow.

In New York, light sweet crude for October delivery fell $1.61 to settle at $65.96 a barrel on the New York Mercantile Exchange, which had been closed Monday for Labor Day. Crude futures, which briefly topped $70 a barrel last week, fell $1.90 Friday, when industrialized nations announced plans to supply the U.S. with 2 million barrels per day of crude oil, gasoline and diesel - an amount roughly equivalent to 10 percent of its daily demand.

Gasoline futures plunged by 12.87 cents to settle at $2.055 a gallon Tuesday on Nymex, but that still leaves them up about 7 percent since Aug. 26, before Katrina struck.

The Energy Department said late Tuesday that the retail price of unleaded gasoline skyrocketed by 45.9 cents last week to average $3.069 nationwide, a new record. That puts pump prices $1.219 a gallon above last year.

At the retail level, "we'll go below $3 a gallon, but not by much," said John Kilduff, an oil analyst at Fimat USA.

Marshall Steeves, Refco Group Inc. oil analyst, said the drop in wholesale gasoline prices "will take time to filter down."

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