NEW YORK — The price of oil plunged to its lowest level in nearly six months Friday, falling below $100 per barrel for the first time since February. A drop in gasoline prices can't be far behind.
It's a welcome trend for motorists, with the summer driving season just around the corner. And it eases some pressure on the U.S. economy, which has shown only agonizingly slow growth in the nearly three years since the Great Recession ended.
Oil fell $4.05, or 4 percent, to $98.49, after a U.S. jobs report offered the latest evidence that the global economy is weakening, possibly reducing demand for oil. At the same time, there is mounting evidence that world oil supplies are growing.
“The jobs report was the coup de grace,” said Judith Dwarkin, chief energy economist at ITG Investment Research. “But it's hard to see how prices could have stayed on the boil given ample supplies and continued economic uncertainty.”
For the week, oil fell more than $6 and is now about $12 below its February high. U.S. gasoline prices have fallen to $3.80 per gallon from a peak of $3.94 in early April.
Now they could go as low as $3.50 per gallon by July 4, according to Tom Kloza, chief oil analyst at the Oil Price Information Service.
Tony Wei, a mechanical engineer from Piscataway, N.J., will welcome lower prices. He travels 100 miles every day to and from his job in Morris County, N.J. He's also planning a 500-mile trip to Canada and a 400-mile trip to southwest Virginia this summer in his Honda Accord.
“Definitely, I'm going to notice it,” he said. “I buy so much gas.”
The picture of the oil market is the reverse of just a few months ago. Then, world oil demand looked to be rising quickly at the same time that world supplies were threatened by a host of small production outages and the potential for drastically reduced production from Iran, the world's third-biggest exporter.
Those developments raised the prospect that world supplies would be at their most tenuous just as the summer driving season arrived in the developed world. The price of U.S. benchmark oil rose to about $110. The price for international oil used to make most of the gasoline in the U.S. spiked even higher, to $128 per barrel.
At a glance
Economy faltering again?
WASHINGTON — One month of slower job growth might have been a blip. Two suggest a worrisome trend: The economy may be faltering again.
The United States generated just 115,000 jobs last month, well below expectations and the fewest since October. The unemployment rate fell to 8.1 percent, but for the wrong reason — workers abandoned the labor force.
From December through February, employers added 252,000 jobs a month on average. But the figure dipped in March and dropped further in April, raising doubts about an economic recovery that can't seem to reach escape velocity.
The report Friday by the Labor Department indicated “an economy that is losing momentum — especially on the jobs front,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets.
Obama, at a Virginia high school to promote a freeze on interest rates for student loans, focused on the six-month total of more than 1 million jobs created. But he said: “We've got to do more.”
The 8.1 percent unemployment rate is the lowest since January 2009, the month Obama was sworn in.
From Wire Reports