Crude oil and gasoline fell on signs that record fuel prices and the disruptions caused by Hurricane Katrina will reduce consumption.
The U.S. average pump price dropped below $3 a gallon for the first time since Katrina.
In Colorado, gasoline prices fell 4.5 cents a gallon for regular during the past week, to an average of $2.995, according to the U.S. Energy Information Administration.
The drop signals that retail gasoline prices are starting to respond to earlier declines in wholesale prices.
Until late last week, Colorado pump prices had held firm above $3 a gallon even after wholesale prices began falling on Sept. 1 when some Gulf-area refineries and oil platforms resumed operations that had been shut down from Katrina.
Energy analysts said consumers in the U.S. and other countries are reducing petroleum consumption because of high prices.
“Demand-destruction fears are trumping fears about damage to oil facilities,” said John Kilduff, vice president of risk management at Fimat USA in New York. “It’s not just Katrina that is hurting demand. High prices have strained economies, especially in Asia, and demand is being curtailed as a result.”
Oil and gasoline prices surged to records after the storm damaged platforms and refineries when it hit the Gulf of Mexico coast on Aug. 29. The International Energy Agency cut its estimate for 2005 world demand growth in a report released Friday as high fuel prices curbed sales in Asia.
Crude oil for October delivery fell 74 cents, or 1.2 percent, to $63.34 a barrel on the New York Mercantile Exchange, the lowest close since Aug. 18. Futures have declined 11 percent since touching a record $70.85 a barrel on Aug. 30. Prices are 48 percent higher than a year ago.
Gasoline for October delivery fell 8.6 cents, or 4.4 percent, to close at $1.8737 a gallon in New York, the lowest since Aug. 23. Futures reached $2.92 a gallon on Aug. 31, the highest since trading began in 1984. Gasoline futures are up 61 percent from a year ago.
Katrina has slashed energy production in the Gulf, source of about a third of U.S. output. The storm shut 860,636 barrels a day, or 57 percent, of production, the Minerals Management Service said Monday.
Global oil consumption will average 83.48 million barrels a day this year, 250,000 barrels a day lower than forecast a month earlier, the agency said. Asia accounted for 68 percent of the reduction. China’s 2005 average was cut by 100,000 barrels a day, and the demand forecast in other Asian nations was reduced by 70,000 barrels a day.
AAA Colorado’s daily price report Monday showed Glenwood Springs had the highest average price at $3.266 a gallon. The lowest-priced Colorado city in the survey was Grand Junction, with an average price of $2.96. Denver’s average was $2.99.
“The recovery continues to be slow,” said Kyle Cooper, an analyst with Citigroup Inc. in Houston. “Government reserves will more than make up for reduced production, but they will eventually have to be replaced. This will probably end up being the most damaging storm to the industry by far.”
The government last week began releasing 30 million barrels from the Strategic Petroleum Reserve.
Denver Post staff writer Steve Raabe contributed to this report.
