Pump prices end the week lower, oil higher

[July 10, 2010]  NEW YORK (AP) -- Drives to the beach and summer road trips will cost less this weekend, with average gasoline pump prices around the country more than four cents lower than a week ago.

A gallon of unleaded regular costs $2.713, according to AAA, Wright Express and Oil Price Information Service. A year ago the average was $2.58 a gallon. Most analysts think gas prices have peaked for the summer and will be generally lower over the next couple of months. Demand remains weak with many consumers concerned about high unemployment numbers and the strength of the economic recovery.

Oil prices rose for the third straight day on Friday, helped by improving stock prices and lower crude supplies. Benchmark crude added 65 cents to settle at $76.09 a barrel on the New York Mercantile Exchange.

Oil prices have risen this week with the stock market, which rebounded from a pre-holiday sell-off last week. The Dow Jones Industrial Average rose more than 59 points to close at 10,198.03. "The DJIA and crude have not been moving point-for-point, but they have had similar-sized gains in numbers," energy consultancy Cameron Hanover said in a note to investors.

Still, Cameron Hanover said oil's rise looks like a rally more than a genuine advance, and "usually, it takes more than just a rally to convince market participants that the trend has changed in a market."

Crude prices got a boost from a government report that said oil supplies dropped last week. Crude inventories fell by 5 million barrels, the Energy Department's Energy Information Administration said Thursday, more than the 3.5 million barrels drop forecast in an analysts' survey by Platts, the energy information arm of McGraw-Hill Cos.

The decline apparently had more to do with weather than increased demand: "The sizable U.S. crude draw in the reporting week was driven by output declines in the U.S. Gulf due to platform evacuations ahead of Hurricane Alex," said JP Morgan analysts.

Energy analyst Phil Flynn agreed it was the weather but pointed to hurricanes in the Pacific that disrupted oil imports on the West Coast as the culprits.

The EIA report also said the four-week average for wholesale gasoline demand rose about 2 percent. "That is the best comparison we have seen in months," Cameron Hanover said. "But it is still a little disappointing for the week reflecting Independence Day, which is a driving icon as far as holidays go."

Natural gas was a little higher Friday, up 0.3 cent to settle at $4.402 per 1,000 cubic feet. It has dropped about 9 percent in the past week. Prices fell 3.5 percent on Thursday after the EIA inventory report showed supplies rising more than expected and a brutal heat wave broke in the Northeast. Some analysts think natural gas will rise in the coming months, because hot weather will continue to push up electricity demand. Natural gas is used by some utilities to produce power. Also, forecasters say conditions will favor formation of more hurricanes that could threaten platforms and pipelines in and around the Gulf of Mexico.

In other Nymex trading, heating oil rose 2.04 cents to settle at $2.0257 a gallon, and gasoline gained 1.89 cents to settle at $2.0700 a gallon.

In London, Brent crude picked up 71 cents to settle at $75.42 a barrel on the ICE Futures exchange.

[Associated Press]

Associated Press writers Pablo Gorondi in London and Alex Kennedy in Singapore contributed to this report.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.