Oil Sees Biggest Drop in Six Weeks

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Oil Sees Biggest Drop in Six Weeks

07/24/2008
NEW YORK -- Despite Hurricane Dolly and a sliding demand on U.S. energy, oil prices fell to a six-week low on Tuesday.

Reuters reported U.S. crude futures dropped to $127.95 a barrel after going as low as $125.63, which marked the lowest level since early June.

"We've now seen more than a $20 decline in the crude oil market from the highs, and this suggests that we've seen enough of a shift in the supply and demand balance on a larger scale to cap the market," Tim Evans, energy analyst for New York-based Citi Futures Perspective, told Reuters.

According to a MasterCard survey released earlier this week, gasoline consumption is running approximately 2.2 percent below year-ago levels, which supports the notion that motorist are limiting the time behind the wheel in light of record-high gas prices.

While the 2005 hurricane season negatively impacted the petroleum market, analysts said Dolly, which is the first major storm of the season and set to make landfall on the Texas/Mexico border, will have little impact on refineries operating in the Gulf of Mexico region.

"The Dolly storm premium is being taken out of the market," Phil Flynn, analyst at Alaron Trading in Chicago, told Reuters.