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 Refinery problems in the Midwest caused the most recent foray by gas prices above $3. But refineries are returning to service after a spring that had seen an unusual number of unexpected problems. That is adding to the sentiment among futures investors that gasoline prices have peaked for the year.
Meanwhile, gas futures prices, which have fallen in six of the last seven trading days, extended their decline. The August gasoline contract fell 2.68 cents to settle at $2.1646 a gallon on the New York Mercantile Exchange. Gas futures fell 6.02 cents, or 2.7 percent, over the course of the week.
"There are extremely bearish technicals," in the gasoline futures market, said Jason Schenker, an economist at Wachovia Corp.
Oil futures fell 35 cents to settle at $75.57 a barrel on the Nymex after trading as high as $76.13 early in the day. A front-month contract last settled over $76 a barrel on Aug. 9. The Nymex September crude contract fell 28 cents to settle at $75.79.
Linda Rafield, senior oil analyst at Platts, the energy research arm of the McGraw-Hill Cos., noted that Friday's trading reflected investors closing out their August holdings. "You always get additional volatility ahead of a contract expiration," she said.
Crude oil ended the week up $1.64, or 2.2 percent, and set 11-month records nearly every day.
Nymex natural gas prices slipped 26 cents to settle at $6.446 per 1,000 cubic feet after a group of companies headed by Anadarko Petroleum Corp. started producing gas from their new Independence Hub platform in the Gulf of Mexico. Natural gas inventories have also been growing in recent weeks.
"Supply looks like it's going up even more, so prices go down," Schenker said.
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 Nymex heating oil futures fell 2.21 cents to settle at $2.0922 a gallon. In London, Brent crude for September delivery fell 3 cents to settle at $77.64 on the ICE Futures exchange.
Volatility will likely continue in oil futures markets, where investment funds are betting prices will rise despite weak fundamentals, analysts say. But they believe gasoline prices will most likely continue falling.
"Gasoline demand is up, but it's easing," Schenker said.
In its inventory report on Wednesday, the Energy Department's Energy Information Administration said gasoline inventories dropped unexpectedly last week. That fed a one-day price rally, but analysts, who noted that the inventory decline was largely caused by a drop in imports, believe investors initially overlooked the government's report that refinery utilization levels grew.
Many analysts see those refinery utilization levels as a far more important factor than inventory levels because higher utilization suggests refiners are increasing production. Concerns about low production helped drive gas prices to their record levels in May. As production increases, prices should fall, this line of reasoning goes.
"The market sees supply-demand balances easing," Rafield said.
[Associated Press;
By JOHN WILEN]
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