Oil prices hover around $40 a barrel

Due to larger than anticipated American supplies of gasoline and other oil byproducts, the price of oil per barrel continues to remain low. Although OPEC had indicated earlier in the month that they planned to decrease output, oil continues to cost about $40 per barrel.

“Crude oil is set to continue on its downward spiral through the end of the year,” John Kilduff, senior vice president of risk management at MF Global Inc. in New York, says to Bloomberg News. “The build in gasoline supplies last week will put further pressure on the market.”

Gasoline stores are currently in excess of 200 million and are predicted to rise by another 750,000 barrels, according to Bloomberg’s survey-based forecasts. Large stores typically indicate that gasoline prices will remain constant or drop if no other major factors influence the market.

In addition, despite the trend toward an increased demand for home heating oil in the winter months, the price of oil has declined dramatically since its high of nearly $150 per barrel this past July. Prices have dropped over 75 percent since the record of $147.27 was set on July 11, 2008.

“We will probably test $35 and $30 before year’s end, as traders square their books,” Kilduff tells Bloomberg News. “We can expect prices to rebound next year.”

Prices have, in fact, begun to move in an upward direction from recent lows around the $35 mark and are expected to carry through to the new year around $40.

--Bridget O'Sullivan

Oil prices drop while demand continues

The cost of crude oil dropped over 32 percent last month, the biggest one-month decline on record since 1983.

Although lower oil prices will likely translate into savings for consumers on expenses such as gas and groceries, the drop may be a bellwether of bad economic news. “Oil prices continue to drop as a direct relationship between a weak global economy and demand," Mark Williams, a risk management expert and finance professor at Boston University, tells MarketWatch.

Experts suggest that lower demand in Asia may exacerbate the effects of stagnant or declining growth that are already being felt in the US. In addition, the decisions the OPEC makes about whether or not to decrease production is another factor that could cause prices to change.

"Should they become more aggressive in supply quotes, how will this impact the economy? In particular, the global economy is vulnerable and such OPEC-imposed quota restriction could push the economy in even a deeper recession, further pushing down oil prices," Williams continues.

One way, however, to decrease the fluctuations in oil prices and supply would be to develop more alternative fuel sources. As long as consumers are reliant on oil for necessities such as gas and home heating oil, they also remain subject to the market’s ongoing ups and downs.

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--Bridget O'Sullivan

Price of oil is expected to drop

The price of oil is low and likely headed lower reports the Associated Press. As the stock market experienced turmoil last Monday, the price of a barrel of oil dropped to a price not seen since early 2008.

Holding steady around $90 a barrel this week, the prices which neared $150 midway through the summer now seem to belong to the distant past. As fears surrounding the market for credit continue to grow, oil prices are likely dropping in part because continued growth seems unsustainable, even in Asia’s developing countries.

"The market is finally acknowledging that this credit crisis is a global phenomenon and that will equate to lower world oil demand in the future," Phil Flynn, analyst at Alaron Trading Corp. in Chicago, tells the Associated Press. "People thought the crisis would be contained to the U.S. and we'd see oil demand in China and India continue to grow. Now that just doesn't seem possible."

Though oil prices are falling in large part due to bad economic news, the lower prices do translate into at least a little good news for consumers.

The article reports that according to AAA, the average price of a gallon of gas in the United States is currently about $3.50. Average prices topped out at over $4.10 this past July, so the lower prices should make filling up less painful.

In light of poor stock performance and declining home values, however, the lower gas prices may provide little relief.

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--Bridget O'Sullivan