Oil prices settle below $85 a barrel
NEW YORK -- Oil prices fell Friday for a third day, dropping below $85 as traders questioned whether Americans were burning enough fuel to justify higher prices.
Benchmark crude for May delivery lost 47 cents to settle at $84.92 a barrel on the New York Mercantile Exchange. In London, Brent crude added 2 cents to settle at $84.83 on the ICE futures exchange.
The slump in crude wiped out gains from earlier in the week, when prices jumped to an 18-month high above $87 a barrel. If oil continues to tumble, it could pull U.S. gasoline prices lower. But experts still predict gasoline will get more expensive this summer as vacationers hit the road and the driving season begins in earnest.
The Energy Information Administration said this week the national average should top $3 a gallon (79 cents a liter) this summer.
Oil prices tumbled even though stock markets rallied and the dollar fell compared to other major currencies. A weaker dollar usually props up oil prices since investors holding foreign currencies find they can buy more crude for the same price.
When oil prices started falling this week, "it spooked some people," analyst Addison Armstrong said.
Analyst Stephen Schork said some of the enthusiasm that pushed oil higher earlier in the week is disappearing. "Maybe prices went up too far, too fast," Schork said.
Oil surged to $87.09 on Tuesday after the government reported that the economy added jobs in March. More jobs means more people will be driving to work. And that means more trips to the gas station.
So far the uptick in the economy hasn't really increased the country's appetite for energy.
The U.S. is still storing more oil than usual. And while gasoline demand has increased 2 percent since last year, overall petroleum demand, including jet fuel and diesel fuel, has tumbled. The four-week average for U.S. petroleum consumption dropped for the third week in a row to just over 19 million barrels a day.
In other Nymex trading in May contracts, heating oil and gasoline both fell less than a penny to settle at $2.226 and $2.2893 a gallon, respectively. Natural gas added 16.1 cents to settle at $4.070 per 1,000 cubic feet.