Oil, gasoline prices continue falling
Area drivers paying over $1 less per gallon at pump since mid-June
Gasoline and oil prices have fallen sharply in recent weeks, to prices not seen since before Russia invaded Ukraine in late February.
Houston drivers are benefiting, with gasoline in the area falling another 16 cents to average $3.57 a gallon, according to fuel-price tracking service GasBuddy. Prices have plunged by more than $1 a gallon since peaking in mid-June at a recordhigh $4.64. Some stations are selling gas for less than $3, GasBuddy said.
Local prices are down 68 cents from a month ago, but are still up 80 cents from a year ago.
Nationally, gasoline prices also fell 16 cents, to an average $4.01 a gallon, down 69 cents from a month ago, but 84 cents more than a year ago. The national average peaked over $5 a gallon.
“The national average is poised to fall back under $4 per gallon as early as (Monday) as we see the decline in gas prices enter its eighth straight week,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “The groundwork is laid for a ninth week of decline.”
That’s because oil markets are struggling to divine the direction of the global economy: how quickly it may slow and how that will affect demand, analysts said.
West Texas Intermediate, the U.S. benchmark, which lost 9 percent last week to fall below $90 a barrel, rebounded Monday, rising $1.75 to settle at $90.76.
While fears of a possible recession have reached the U.K., where the Bank of England raised interest rates to a 27-year high, the United States economy continues to show signs of strength. Employers last month
continued to hire at a blistering pace, adding more than 500,000 jobs, the Labor Department said Friday.
“The market has no clue how much of a demand hit to factor in as a result of the global economic slowdown,” said Vandana Hari, founder and CEO of Singapore-based Vanda Insights.
The Organization of the Petroleum Exporting Countries and the International Energy Agency could provide some clues when they release their monthly reports this week. OPEC in its July report left its forecasts for both economic growth and demand unchanged.
While demand will continue to lead the oil markets, “wild cards such as U.S. hurricane season and China demand could still shift momentum at any moment,” said Paul Hickin, a director at S&P Global Commodity Insights.
The National Hurricane Center is showing a disturbance in the Atlantic Ocean that could turn into a tropical depression by the middle of the week. It’s too early to know how the storm might strengthen and whether it could pose a threat to oil and natural gas installations in the Gulf of Mexico.
The economic forecast, however, could become more clear this week as the Labor Department on Wednesday provides another snapshot on inflation when it releases the consumer price index for July. Economists at the University of Michigan will provide an early look at consumer sentiment at the end of the week.
Caroline Bain, chief commodities economist at Capital Economics in London, said inflation is a lingering concern, as well as the main factor to watch. For her, the steep loss in crude oil prices last week was a bit of an anomaly.
“The big picture,” Bain said, “is that the market could be pricing in too much recession fear.”