NEW YORK – The price of oil fell for the ninth consecutive day Wednesday as global supplies continue to flow despite unrest in the world’s most important oil-producing region.
The prolonged drop could lead to lower gasoline prices for U.S. drivers in the weeks ahead.
In the Middle East, the insurgency in Iraq is far from resolved, but it hasn’t halted oil exports. The fighting now seems unlikely to spread to Iraq’s major oil fields. Tensions between Israel and Hamas have escalated in the past week but aren’t threatening major oil production.
On the supply side, Libyan crude exports appear poised to surge after an agreement between the government and local militias cleared the way for export terminals to open. And U.S. production continues to soar.
At the same time, refiners have already made much of the gasoline needed to fuel road trips for summer vacationers, so crude demand will begin to ebb over the next couple of months. Meanwhile, the nation’s oil supply as of July 4 was 382.6 million barrels, up 2.3 percent from this time a year ago.
We in the U.S are sitting on a ton of crude oil, says energy analyst Stephen Schork of the Schork Group. We’re at the point in the season (where) we have a lot of supply, and demand is about to fall.
U.S. benchmark crude fell $1.11 Wednesday to close at $102.29 in New York. That’s slightly lower than the price on June 6, before insurgents seized the Iraqi city of Mosul, and 5 percent below the 10-month high of $107.26 reached June 20 at the height of concerns over the insurgency.
The violence in Iraq led to an increase in U.S. retail gasoline prices between Memorial Day and July 4, a time when they usually fall. That is now starting to reverse.
The national average price of a gallon of gasoline is $3.65, according to AAA, OPIS and Wright Express. That’s 3 cents cheaper than the June high of $3.68 per gallon, and experts forecast the pace of declines will pick up.