Oil rally cools, ending six straight weeks of gains
Any slowdown in the rebound of crude oil is welcome news to consumers, who continue to pay the highest gasoline prices on record for this time of year.
Crude oil for December delivery dropped $1.32 to $97.67 a barrel during trading on the NYMEX on Monday, ending the commodity's longest sustained rise in more than two years. Brent oil was down $2.09 to $112.07 a barrel Monday on the London-based ICE Futures Exchange.
Oil prices have rallied strongly -- up 30.3% -- since early October, when the commodity fell to its 2011 low of $74.95 a barrel on the New York Mercantile Exchange. That was the same day that the European benchmark, Brent North Sea crude, fell below $100 a barrel.
Analysts said the oil rally was driven by strong demand for oil in emerging economies and by the loss of Libyan oil production during its civil war. The price of oil was down Monday, however, even though Japan posted its first economic growth since its earthquake and tsunami earlier this year.
Retail gasoline prices remained a burden on consumers.
The average price of a gallon of regular gasoline around the nation Monday was $3.417, up a penny from a week ago and 9.7% higher than the old record for this time of year of $3.111, which was set in 2007.
In California, the average price for a gallon of regular gasoline was $3.820, down 1.8 cents from last week, but 12.5% higher than the previous record for this time of year, which was $3.395, also set in 2007.
Gasoline prices remain high, in part, because some of the nation's refiners are making more diesel and heating oil at this time of year and exporting record amounts of diesel overseas, where they can make more of a profit.
Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey, added that demand for gasoline in the U.S. is so low that refineries who aren't selling overseas are shutting down production or at least considering the same.
"On the Eastern half of the country, we've already seen Conoco-Phillips shut down a refinery and Sunoco may be ready to shut down another," Kloza said. "This is also going to set the stage for a big rally in gasoline prices in the Spring of 2012."
-- Ronald D. White
Photo: Mohammad Rezaie changes the gas prices at his 76 gas station in Oakland, Calif. Prices remain at record highs for this time of year. Credit: Paul Sakuma / Associated Press