Diesel back below $2 a gallon as oil price sags

| Monday, December 13, 2004

The national average price-per-gallon for diesel fuel fell Monday, Dec. 13, to $1.997 from last week’s average of $2.069, the Department of Energy reported.

It was the first time since late September that the national average price of diesel was below $2 a gallon – and the first in months that California did not have the highest price of fuel.

The highest average prices in the nation are found in the New England region, where the average cost is $2.206.

Among the higher average prices were in California, at $2.138; the West Coast region, at $2.097; and the Central Atlantic region, at $2.184.

Other prices included the East Coast region, where the average price is $2.063; the Lower Atlantic region, at $1.998; the Rocky Mountain region, at $2.049; the Midwest region, at $1.953; and the Gulf Coast region, at $1.910.

Meanwhile, crude oil prices dipped Monday due to perceptions of a glut in the world market, despite OPEC’s decision to cut back on production. Prices had rallied earlier in the day on concerns the cut would leave the Asian market short.

But analysts told The Associated Press it would take weeks for the total OPEC cutback of 1 million barrels a day to be felt on world markets. Plenty of crude is still available in the pipeline because of the cartel’s overproduction in early fall after prices skyrocketed to record highs, they said.

After climbing above $41 a barrel, light sweet crude for delivery in January was down 19 cents to $40.52 per barrel in afternoon trading on the New York Mercantile Exchange.

Oil prices are nearly $15 a barrel cheaper than the all-time closing price of $55.17 recorded twice in late October, though prices remain roughly 40 percent higher than a year ago.

OPEC oil ministers agreed the cutbacks would take effect starting Jan. 1. But there was some confusion Monday after Kuwait’s Sheik Ahmed Al Sabah said reductions in output would start immediately, whereas the cartel’s president, Purnomo Yusgiantoro, said the production cut would take effect Jan. 1, as planned.

“There is still an oil oversupply of 1 million barrels a day this month, and this caused the drop in oil prices,” said Yusgiantoro, who also predicted demand would fall in the second quarter of 2005.

Analysts agreed it was too early to expect prices to rise as a result of OPEC’s decision.

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