Oil prices fall; gasoline supply swells

July 09, 2009|Associated Press

NEW YORK - Oil prices neared $60 per barrel yesterday as the government reported that the size of stockpiles of gasoline soared again.

Retail gas prices have fallen every day for more than two weeks, and gasoline futures fell more than 9 cents a gallon yesterday.

Energy markets are undergoing an extended sell-off, the longest in 10 months.

Benchmark crude for August delivery fell more than 4 percent, or $2.79, to settle at $60.14 a barrel in New York. Prices came within a penny of $60 at one point. In just over one week, oil prices have fallen more than 18 percent.

“The recession is far from over,’’ said analyst Stephen Schork. “Perhaps the run-up in prices was a bit overstated.’’

Crude prices by last week had more than doubled from lows reached in January, following record highs near $150 last summer.

Cheap oil sparked a new round of investment, as did the weaker US dollar. Crude is priced in dollars, so it effectively becomes cheaper internationally when the dollar falls.

Yet dismal economic data continue to emerge and the fundamentals of supply and demand appeared to take control of the market last week.

Gasoline, heating oil, and natural gas futures are also tanking. Americans are driving billions fewer miles than in recent years; though refiners are slashing production, gasoline continues to pile up. Gasoline in storage grew by another 1.9 million barrels last week, the fifth straight week of growth.