Published June 22, 2012 in the Rutland Herald
Traders work the crude oil options pit at the New York Mercantile Exchange. The price of oil dropped to $78.20 per barrel Thursday.
Photo: AP PHOTO
Oil prices drop below $80 a barrel , hit 9-month low
NEW YORK — America isn’t generating enough jobs, Europe is headed for recession, and China, the world’s powerhouse economy, is starting to slow.
At least there’s some good news at the pump.
The price of oil fell to its lowest level in almost nine months Thursday — $78.20 a barrel. Gasoline is way down, too, at $3.47 a gallon. The national average for gas is 17 cents cheaper than a year ago and down 46 cents from its peak in early April. Experts say it could dip to $3.30 by July 4th.
“We’re grinning ear to ear,” said Patrick DeHaan, a senior petroleum analyst at GasBuddy.com. “This was so unexpected just a few weeks ago, and it’s such great timing just as people are hitting the road” on summer trips.
Oil fell Thursday after reports from China and the U.S. both pointed to a slowdown in manufacturing. As factories fill fewer orders, they use less energy, and that cuts into petroleum demand.
China’s oil demand rose less than 1 percent in May, the second-smallest increase this year, noted Platts, the energy-information arm of McGraw-Hill Cos.
Oil investors are also disappointed that the Federal Reserve didn’t announce more aggressive moves to stimulate the economy after its meeting this week.
The Fed ended the meeting with a dour outlook for the U.S. economy, cutting its forecast for growth and saying that the unemployment rate won’t fall much more the rest of the year.
“I’m not expecting any better economic news for quite some time,” said independent petroleum analyst Andrew Lipow.
The gloomy forecast is putting more pressure on the price of oil, which has fallen by nearly $32 a barrel, or 29 percent, since its high of $109.77 on February 24. Already, the price has been pushed lower by easing tensions over Iran’s nuclear program, Europe’s debt crisis and weak jobs growth in the U.S.
Meanwhile, natural gas prices jumped more than 3 percent. The government said that the nation’s supplies didn’t grow as much as expected last week. The Energy Information Administration reported that the U.S. was holding more than 3 trillion cubic feet of gas in storage facilities. That’s more than 27 percent higher than average for this time of year, but a little less than what analysts expected.
Natural gas futures rose by 6.5 cents to end at $2.582 per 1,000 cubic feet in New York.
In other energy futures trading, heating oil lost 6.21 cents to end at $2.5253 per gallon, while wholesale gasoline lost 4.01 cents to finish at $2.5501 per gallon.
Brent crude, which helps set the price of oil imported into the U.S., fell by $3.46 to end the day at $89.23 per barrel.