Oil falls again: Is the bubble bursting?
NEW YORK (AP) - July 18, 2008 Experts won't go that far just yet.
"It's too early to say we've seen the worst of it," said Tom
Kloza, publisher and chief oil analyst of the Oil Price Information
Service in Wall, N.J. "We would be Pollyannish if we believe one
week represents a trend."
Still, with oil recording yet another drop on Friday, some
industry experts who just days ago thought there was more juice
left in oil's meteoric run are reconsidering.
"If this is not the bubble's implosion, than it's a reasonable
facsimile," analyst and trader Stephen Schork said in his daily
market commentary. "Time will tell. Nevertheless, for the time
being we no longer care to hold a bullish view."
Light, sweet crude for August delivery fell 41 cents Friday to
settle at $128.88 on the New York Mercantile Exchange - well below
its trading record of more than $147 a week earlier.
The average price of a gallon of regular gas fell about a penny
for the day, to $4.105, according to auto club AAA, the Oil Price
Information Service and Wright Express. Diesel prices dipped
three-tenths of a cent to $4.842 a gallon.
Some analysts said a nationwide average of $4 or even lower
could be in the offing - almost unthinkable in a summer when there
has seemed to be no relief at the pump - although they cautioned
that there is no guarantee prices will stay low.
"We're going to see some relief from that relentless march
higher," Kloza said.
Gas may be getting just a bit cheaper, but major changes in how
Americans live and drive are already in motion.
Car buyers have been fleeing to more fuel-efficient models. U.S.
sales of pickups and sport utility vehicles are down nearly 18
percent this year through June, while sales of small cars are up
more than 10 percent.
While slashing production of more-profitable trucks and SUVs,
automakers have been scurrying to build their most fuel-efficient
models faster.
Toyota Motor Corp., which hasn't been able to keep up with
demand for its 46-miles-per-gallon Prius hybrid, said last week it
will start producing the Prius in the U.S. and suspend truck and
SUV production to meet changing consumer demands.
Ford Motor Co. and General Motors Corp. also have announced
plans to increase small car production, and GM has said 18 of the
19 vehicles it is launching between now and 2010 are cars or
crossovers.
Some brave traders used the week's pullback in oil prices as a
chance to buy barrels that suddenly seemed to be on sale. But oil
analysts were advising investors to beware.
"Buying here is an opportunity if you are a deep believer in
$200 (a barrel), otherwise we think that caution would be better
applied," analyst Olivier Jakob of Petromatrix in Switzerland said
in a research note.
If oil buyers sense that the slide was overdone, you'll probably
notice at the pump quickly.
"If (oil prices) rebound, you're going to see a quick reaction
at the gas station, because their profit margins are so
stretched," AAA spokesman Geoff Sundstrom said. "They may be very
fast bringing prices back up."
In other Nymex trade, heating oil futures fell 5.23 cents to
settle at $3.6915 a gallon while gasoline futures edged up 0.73
cent to $3.1709 a gallon. Natural gas futures rose 3.3 cents to
$10.57 per 1,000 cubic feet.
In London, Brent crude futures for September delivery rose 88
cents to settle at $130.19 on the ICE Futures Exchange.