Tags: Oil | Prices

Memorial Day Drivers Will Find Cheaper Gas

Friday, 28 May 2010 01:26 PM

Motorists will catch a break at the gas pump as they head out for the Memorial Day weekend.

Gasoline prices have tumbled almost every day this month, dropping Friday to a national average of $2.749 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

A gallon of regular unleaded is 12 cents cheaper than it was a month ago, 8 cents cheaper than just a week ago. The timing couldn't be better for holiday travelers.

AAA says 1.6 million more Americans will hit the highways this weekend than last Memorial Day, but the travel club expects them to spend less than last year.

Gasoline is cheaper in part because of a plunge in oil prices. Crude's fallen more than 15 percent since it hit an 18-month high of $87.15 on May 3. Oil has since rebounded, and that may eventually push pump prices higher later this summer.

Crude prices were steady on Friday, as stock markets retreated a little from Thursday's big gains and the dollar gained strength. Oil contracts are traded in U.S. currency, and a stronger dollar makes them more expensive to buy with foreign money.

This week, oil rebounded from the lowest levels since July as investors set aside worries about the European debt crisis and focused on improving economic data. Investors also were encouraged when the Chinese government said it wasn't rethinking its investments in European countries' debt.

Despite a slight drop in oil Friday, "we've had a huge momentum swing back to the upside," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "We could close the market higher today."

The benchmark oil contract for July delivery rose 2 cents to $74.56 a barrel on the New York Mercantile Exchange. In London, Brent crude added 4 cents at $74.70 on the ICE futures exchange.

In other Nymex trading in June contracts, heating oil added 0.76 cent at $2.0070 a gallon, and gasoline futures lost 0.34 cent at $2.0355 a gallon. Natural gas rose 1.1 cents to $4.305 per 1,000 cubic feet.

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