Oil, gasoline prices seen to keep dropping

NEW YORK (AP) – Signs that the global economy isn’t strong enough to quickly burn through the world’s ample supplies of oil and gasoline sank crude oil prices for a second straight day.

Weak US economic reports Friday followed on the heels of reduced forecasts for oil demand. Oil dropped two percent.

The falling prices will help extend a long, slow slide in retail gasoline prices, forecasters say. The average price of a gallon of gasoline in the US fell a penny overnight to $3.56 per gallon. That’s 23 cents lower than the high for the year, set on Feb. 27. And gas is now 36 cents cheaper than a year ago at this time.

Drivers in some states, such as Wyoming, Montana, Missouri and South Carolina, may even see a few stations selling gas for under $3 per gallon this weekend, says Tom Kloza, chief oil analyst at Gasbuddy.com.

“We’re looking at (futures and wholesale) prices that will propel this drop into the spring,” Kloza said.

Gasoline prices appear to be on a similar curve to last year, but on an earlier timetable. The springtime highs instead came in late winter, and a seasonal low could come in June this year instead of July. “It’s the same roller-coaster ride, but the top of the ride came sooner,” Kloza said.

US oil futures fell $2.22, or 2.4 percent, to $91.29 in New York. Brent crude, which is used to price oil used by many US refiners to make gasoline, fell $1.34 to $103.04, the lowest level since mid-July.

Supplies of both oil and gasoline are plentiful, and demand appears to be weak.

“It’s the usual culprits,” says Judith Dwarkin, Chief Economist at ITG Investment Research. “Supply growth is outpacing demand growth.”