NEW YORK (AP) — Gasoline markets showed the first signs this week that an extended rally in pump prices is nearing an end after 52 straight days of price increases.
Gasoline futures started falling midweek after a government report showed that gas production and imports jumped during an extended rally in retail gas prices. If they continue to fall, American motorists would finally get a break after seeing pump prices climb all summer.
"Supply won't be an issue" with gasoline, said Andrew Lebow, senior vice president and broker at MF Global. "That's why gasoline futures are dropping. It's down so sharply that it's really going to be hard for crude for any of the energy commodities to show gains today."
Gasoline for July delivery fell 6.85 cents Friday to $1.9610 a gallon. The plunge in gas futures dragged down other energy commodities as well.
Benchmark crude for July delivery dropped $1.09 to $70.28 a barrel in light trading as the contract was set to close Monday. The August contract fell $1.18 to $70.73 a barrel.
Crude prices have doubled their value in three months, hitting a high for the year of $73.23 a barrel last week.
Money has poured into oil markets as the dollar weakened against the euro. While demand for energy remains weak, oil markets are attracting a lot of attention because crude can be used as a hedge against inflation.
Meanwhile, retail gas prices added a half cent overnight to a new national average of $2.69 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of gas is 35.6 cents more expensive than a month ago, but at this time last year a gallon cost more than $4.
Pump prices could remain near the current level through the Fourth of July weekend.
"Gas prices should back off a bit after that," said Phil Flynn, an analyst at Alaron Trading Corp. "However, you still have a wild card with oil. If crude keeps driving higher, then gas will too."
For the first time in months, geopolitical events are also beginning to at least get some attention in oil markets.
In Nigeria, Africa's largest crude producer, a militant group said it blew up a major pipeline run by Italian oil company Agip. Violence has been escalating in the oil-rich southern region as the military intensifies operations to flush out rebels battling for a larger share of the Nigeria's oil revenues.
In Iran, protesters loyal to presidential candidate Mir Hossein Mousavi have been staging massive street rallies to protest what they believe to be a rigged election.
However, because of the recession, there's so much extra oil production capacity around the world that experts say a drop in Iranian or Nigerian exports won't lead to any price spikes.
In other Nymex trading, heating oil dropped 2.78 cents to $1.8092 a gallon and natural gas for July delivery lost 3.5 cents to $4.058 per 1,000 cubic feet.
In London, Brent prices lost 77 cents to $70.29 a barrel on the ICE Futures exchange.
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Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.
Copyright 2009 The Associated Press.
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