Oil futures drop below $98 a barrel. Gasoline futures decline even more. Oil futures now down 15 percent this month.
Oil prices dropped Monday, a good sign for drivers who are finally seeing a little relief at the gas pump.
The average price for a gallon of regular fell 3 cents over the week to $3.955 nationally. That's still nearly 14 cents more than it was a month ago, according to AAA, Wright Express and the Oil Price Information Service.
Oil futures settled down 2.3 percent and gasoline futures dropped 4.7 percent Monday as investors returned their attention to weakening demand for gasoline in the U.S. Both contracts had gained slightly last week amid concerns that Mississippi River flooding could disrupt refineries and supplies in the Gulf region.
Oil is now down about 15 percent in May, while gasoline futures are about 14 percent lower. Those declines haven't yet reached the nation's gas stations, though Analysts say prices could fall as much as a quarter or more by Memorial Day.
That will help drivers as summer driving season nears, although they'll still pay more for gas than a year ago. For now, motorists in about two dozen states are paying above the national average. In 13 states the pump price tops $4 a gallon.
Oil prices soared about 35 percent from mid-February through the end of April on fears that supplies could be disrupted by uprisings in the Middle East and North Africa. Those fears have begun to abate as supplies continue to flow from the oil-rich region.
Traders also are more optimistic that any disruption at Gulf Coast refineries from flooding will be minimal. The Army Corps of Engineers opened two gates at the Morganza spillway to divert water away from Baton Rouge, La., and New Orleans — and from refineries along the Mississippi's lower reaches.
The more prominent concern for the market is flagging demand for gasoline. Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, noted that consumer demand has fallen because of high pump prices.
Tom Kloza, publisher and chief oil analyst at OPIS, predicted pump prices will range between $3.25 a gallon and $3.75 a gallon by mid-June. The biggest declines will be in regions that don't rely on supplies from Gulf Coast refineries, such as the Midwest and the Rocky Mountains.
Kloza said prices may have peaked this year — at around $3.98 per gallon — assuming no big hurricanes hit refining centers, and no further disruptions to Middle East oil supplies.
Benchmark oil for June delivery fell $2.28 to settle at $97.37 a barrel on the New York Stock Exchange. In London, Brent crude for June delivery lost $2.44 to settle at $110.84 on the ICE Futures exchange.
In other Nymex trading in June contracts, heating oil fell 6.78 cents to settle at $2.8744 per gallon, gasolinefutures dropped 14.33 cents to $2.9311 a gallon and natural gas rose 6.8 cents to settle at $4.379 per 1,000 cubic feet.