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Energy prices drop, with gas leading way

20 Jun 2009 3:55 AM

Energy prices drop, with gas leading way

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NEW YORK (AP) - Benchmark crude for July delivery dropped $1.09

to $70.28 a barrel on Friday in light trading on the New York

Mercantile Exchange as the contract was set to close Monday.

The August contract fell $1.18 to $70.73 a barrel.

The slump in crude came as gasoline markets showed the first

signs this week that an extended rally in pump prices is nearing an

end after 52 straight days of price increases.

Gasoline for July delivery fell 6.85 cents Friday to $1.9610 a


Crude prices have doubled their value in three months, hitting a

high for the year of $73.23 a barrel last week.

Money has poured into oil markets as the dollar weakened against

the euro. While demand for energy remains weak, oil markets are

attracting a lot of attention because crude can be used as a hedge

against inflation.

Meanwhile, retail gas prices added a half cent overnight to a new

national average of $2.69 a gallon, according to auto club AAA,

Wright Express and Oil Price Information Service.

Pump prices could remain near the current level through the

Fourth of July weekend.

"Gas prices should back off a bit after that," said Phil Flynn,

an analyst at Alaron Trading Corp. "However, you still have a wild

card with oil. If crude keeps driving higher, then gas will too."

For the first time in months, geopolitical events are also

beginning to at least get some attention in oil markets.

In Nigeria, Africa's largest crude producer, a militant group

said it blew up a major pipeline run by Italian oil company Agip.

Violence has been escalating in the oil-rich southern region as the

military intensifies operations to flush out rebels battling for a

larger share of the Nigeria's oil revenues.

In Iran, protesters loyal to presidential candidate Mir Hossein

Mousavi have been staging massive street rallies to protest what

they believe to be a rigged election.

However, because of the recession, there's so much extra oil

production capacity around the world that experts say a drop in

Iranian or Nigerian exports won't lead to any price spikes.

In other Nymex trading, heating oil dropped 2.78 cents to $1.8092

a gallon and natural gas for July delivery lost 3.5 cents to $4.058

per 1,000 cubic feet.

In London, Brent prices lost 77 cents to $70.29 a barrel on the

ICE Futures exchange.


Associated Press writers Chris Kahn in New York, Pablo Gorondi in

Budapest, Hungary and Alex Kennedy in Singapore contributed to this


AP-TK-19-06-09 1755GMT