Oil sell-off continues, pushing the price below $120 a barrel

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From Times staff writer Elizabeth Douglass:

Gravity continues to work its wonders in the oil market.

Crude prices dived further today to close below the $120-a-barrel mark for the first time in three months, reflecting a struggling economy that is softening fuel demand in the U.S. and elsewhere.

Oil futures for September delivery in New York fell $2.24 to close at $119.17 a barrel, the lowest finish since May 5. Today’s close is about $26, or 18%, below the record of $145.29 on July 3.

‘We’ve seen this continued deterioration of price in response to lower demand,’ said Andrew Lipow, a Houston-based analyst and former trader. ‘And in four weeks, it’s Labor Day, and the peak summer travel season is over. Plus, there’s been ample supply for our needs, and we continue to receive imports.’

What’s more, Lipow said, hedge funds and other big investors that rode the energy bull run this year now may be giving up, putting further downward pressure on prices as speculative money exits the market.

‘My opinion is we’re going to $110,’ he said.

Retail gasoline prices, which have been falling steadily along with the price of oil, are likely to head lower still.

Today, the cost of self-serve in California averaged $4.197 a gallon, down less than a penny overnight, according to AAA. Nationwide, the average price of gas fell a penny overnight to $3.871 a gallon.

The California price peaked at $4.61 a gallon June 19. So your fill-up today is costing about 9% less than it did at the peak.