Gas Prices Fall, Gas Futures Tumble
Monday, July 16th 2007, 12:45 pm
By: News On 6
NEW YORK (AP) _ Gas prices fell overnight, ending more than a week of steady advances.
Gasoline futures, meanwhile, reasserted their leadership on the energy complex, dragging oil prices below $74 a barrel on news that refineries and a pipeline were returning to service quickly after unexpected problems.
The average national price of a gallon of gas dipped 0.4 cent overnight, to $3.05, according to AAA and the Oil Price Information Service. Prices rose through the spring, peaking at $3.227 in late May, on concerns about gasoline supplies. Prices then fell steadily to $2.949 a gallon in early July before refinery problems in the Midwest again sent the national average upward.
While one refinery, a 108,000-barrel-per-day facility in Coffeyville, Kan., remains closed after a flood, others have rebounded quickly from unexpected outages over the past week. A BP PLC refinery in Whiting, Ind., returned a 250,000 barrel-per-day piece of equipment to service, and a pipeline linking Texas to Illinois was reopened after a leak forced its closure on Sunday.
That news, coming after a government report last week that showed gasoline inventories grew sharply, sent gasoline for August down 6 cents to $2.1648 a gallon on the New York Mercantile Exchange. Late last week, gas futures tumbled more than 14 cents a gallon.
Retail prices typically lag the futures market.
Also on the Nymex, light, sweet crude for August delivery gained lost a cent to $73.92 a barrel after trading over $74 earlier. The last time a front-month contract traded or closed over $74 was Aug. 11.
August Brent, which expires Monday, fell 93 cents to $76.64 a barrel, retreating from an 11-month high of $78 earlier in the day on the ICE Futures exchange in London.
``Looks like the sentiment is turning a little bit sour,'' said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago.
Nymex heating oil futures fell 3.06 cents to $2.08 a gallon, and natural gas futures lost 27.7 cents to $6.385 per 1,000 cubic feet. A government report last week showed natural gas inventories grew more than expected for the second week in a row.
Crude oil prices moved higher earlier in the day on word of the closure of a North Sea pipeline. But oil prices faced downward pressure from news that speculation is supporting oil prices. Friday's Commitment of Traders Report showed a record number of investors betting prices will move higher.
Earlier in the year, oil prices followed gas prices higher in sympathy, despite growing crude inventories. That relationship has come apart in recent weeks. On Friday, for instance, oil moved sharply higher, and gasoline sharply lower.
But the two can only move in different directions so long, analysts say.
``Gasoline drove the whole complex higher in May and June, and is certainly capable of causing some downside damage were it to break down,'' wrote Edward Meir, an analyst with Man Financial Inc., in a research note.
Monday's news of refinery restarts gels with market sentiment that gasoline inventories and refinery utilization rates will grow again in Wednesday's inventory report from the Energy Department's Energy Information Administration.
``They're pricing in the inventory report,'' Flynn said.
Gasoline futures are starting to show the kind of definitive, downward motion that analysts think could portend a bear market _ and, for consumers, price relief.
``It's possible that we have peaked out for the season,'' Flynn said.