Oil prices take a big drop, but diesel hits a new high
Oil prices fell yesterday, pulling back at least temporarily from record levels as investors feared that the financial crisis that forced the sale of the Bear Stearns Cos. Inc. was a sign of deep economic trouble.
Crude’s drop came even as diesel prices rose to a new record above $4 a gallon, and gasoline prices remained high.
Diesel, used to transport the vast majority of the nation’s goods, rose 1.3 cents to a national average of $4.002 a gallon, according to AAA and the Oil Price Information Service. The national average price of a gallon of gasoline, meanwhile, dipped slightly to $3.283 a gallon, but remained 73 cents higher than a year ago.
In the five-county Philadelphia area, yesterday’s average pump price was $3.22 a gallon, up four cents in the last week. In South Jersey, the average was $3.04, six cents higher than a week ago.
Oil’s steep decline - falling $4.53 to settle at $105.68 a barrel on the New York Mercantile Exchange - came hours after futures had reached a new trading high of $111.80 on the Federal Reserve’s move Sunday to lower a key interest rate a quarter of a percentage point.
In the last several months, Fed rate cuts have prompted rallies in oil prices because crude futures offer a hedge against a falling dollar. Interest-rate cuts tend to weaken the dollar further.
But the big decline yesterday could be a sign that the oil market’s momentum has turned negative, analysts said.
“People are saying, well, things are a lot worse than we thought,” said Phil Flynn, an analyst at Alaron Trading Corp., of Chicago.
Source: Associated Press
Tags: diesel price rising, oil, USA