- The Washington Times - Monday, September 25, 2006

ASSOCIATED PRESS

Crude-oil futures briefly dipped below $60 a barrel yesterday, then jumped by more than $1 in a sign that the recent free-fall may be nearing an end.

Natural-gas futures continued to sink amid record U.S. supplies, settling at a three-year low.

The average retail price of gasoline nationwide is now $2.38 a gallon — the lowest level since March — and analysts say pump prices soon could decline to within pennies of $2 a gallon. Some stations in the outer suburbs already are selling gas below $2 a gallon.

Although such a drop would no doubt be a relief for drivers after a summer with prices at more than $3 a gallon, gasoline is still about 70 percent more expensive than it was at the start of autumn a few years ago.

Although the petroleum industry is still raking in huge profits by any measure, the recent slide in oil and natural-gas prices has taken some of the froth out of energy company stock prices.

Oil prices have fallen by more than 20 percent since the July peak above $78 a barrel because of rising global inventories, slackening demand growth and a perception among traders that geopolitical and weather-related supply threats have eased.

The downtrend was halted yesterday. Light sweet crude for November delivery on the New York Mercantile Exchange briefly fell as low as $59.52 a barrel, then bounced up to a settlement of $61.45, an increase of 90 cents for the day.

Some traders started buying amid speculation that the Organization for Petroleum Exporting Countries may cut production to prop up prices; others were forced to buy to cover incorrect bets that oil futures would fall even more sharply than they have.

There is also a growing belief among traders that, with gasoline prices weak relative to the cost of crude, oil refiners have an incentive to reduce their output, which could trim market supplies.

“The market is just showing that it doesn’t like being under $60 for too long,” said BNP Paribas Commodity Futures broker Tom Bentz.

The last time front-month futures settled below $60 was March 10.

Oil prices have plummeted in recent weeks with signs of economic weakness in the U.S. and in the absence of new developments in the standoff between the United Nations and Iran.

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