Posted by
alfredlester on Tuesday, May 18, 2010 4:42:29 PM
The two-week slide in oil prices that dragged crude down to its lowest price of the year ended Tuesday.
The question now is whether it is the start of a new trend higher or just a pause before prices fall again.
Benchmark crude for June delivery rose 76 cents to $70.84 a barrel on the New York Mercantile Exchange. The June contract dropped $1.53, or 2.1 percent, to $70.08 on Monday. The price fell as low as $69.27 during Monday's session.
Oil prices have been on a roller-coaster ride since the beginning of the year. Twice since January they have approached $90 a barrel only to slide back to $70. Crude dropped about 20 percent after hitting $87.15 a barrel on May 3, the highest point since October 2008.
"It's premature to say we've placed the lows," said Jim Ritterbusch of Ritterbusch and Associates.
Oil analyst and trader Stephen Schork said prices could drop into the mid-$60s.
Oil has been falling as investors worry about the ripple effects of the debt crisis in Europe and whether it could spread to the U.S.
A drop in the euro against the dollar also has made oil a less appealing investment overseas. Crude is priced in dollars, so oil becomes more expensive for holders of other currencies when the dollar goes up. Analysts are concerned that the debt crisis could slow European economies and drag down demand for oil low interest rate personal loans.
Meanwhile, lower oil prices are slowly making their way to the gas pump. Retail gasoline prices fell 0.8 cent to a national average of $2.859 per gallon, according to AAA, Wright Express and Oil Price Information Services.
Prices have dropped by 4.2 cents over the past week and by 7 cents since May 6, but are still 54.8 cents above year-ago levels.
The oil spill in the Gulf of Mexico has not affected crude prices yet. It also has not interfered with tankers carrying imported oil to Gulf ports or those taking refined products from there to other parts of the country. There is concern though that the spill could eventually slow shipments if vessels must be scrubbed of oil before they reach port.
In other Nymex trading in June contracts, heating oil fell 0.65 cent to $1.9787 a gallon, and gasoline lost 0.08 cent to $2.0423 a gallon. Natural gas rose by 3.1 cents to $4.429 per 1,000 cubic feet.
In London, the Brent crude July contact added 3 cents at $75.13 on the ICE futures exchange.
___
Associated Press writers Pablo Gorondi in Budapest and Alex Kennedy in Singapore contributed to this report.
Oil rising again after a 2-week selloff