Oil slips to seven-week low in US

Source: Energy Digital

Date :7/28/2008 4:35:01 AM

Gas prices on some American forecourts have dipped below US$4 a gallon for the first time in seven weeks.

The move happens amid concerns that the slowing US economy will weaken demand.

The average price for regular gasoline in California and around the nation at the end of last week remained significantly higher compared with a year ago but still reflected the biggest drop of the year.

In California, the average had fallen 23.6 cents to US$4.374 from the all-time high of US$4.610 on June 19, according to the AAA Fuel Gauge Report.

Nationally, the average fell to US$4.006, which was 10.8 cents off the record set July 17.

US sweet, light crude fell US$2.23 to stabilize at US$123.26 a barrel - more than US$20 off their peak in July, when prices reached US$147.27.

Brent crude in London also fell, dropping US$1.92 to US$124.52.

The oil market has been unstable as traders assess whether there will be enough supply to meet demand. Some analysts predict oil prices could drop below $100 by the end of the first quarter of 2009, but others are sceptical.

"Nothing in the fundamental drivers has changed," said Harry Tchilinguirian, an oil analyst at BNP Paribas.

Since last September, traders have been betting that the need for oil from economies, such as China, would continue to power the demand for oil.

At the same time, tensions between politically unstable oil-producing nations and the West sparked fears that supply would be constrained.

The weakening US currency has also encouraged investors to switch into commodities, which have been seen as a more attractive investment as the US economy falters.