For the first time in three months, oil prices are no longer in triple digits.
Crude oil prices dipped below $100 a barrel late Friday for the first time since the second week of February. The price of oil is continuing to fall this morning, dipping to a three-month low of $96.82. That’s down 12% from February 24, when oil peaked at $109.77.
That’s good news for airlines and anyone who drives a car, but bad news for oil investors. But how long will it last? As with many things these days, the fate of oil prices may depend on Europe.
Concerns over sovereign debt problems in the euro zone are yet again rearing their ugly head. The slow European economy is weakening global demand for oil, and demand is unlikely to pick up until upcoming elections in places like Greece and France have been decided.
Increased production out of Saudi Arabia and Iraq has alleviated fears over Iran’s threats to block the heavily traveled Strait of Hormuz. So for now, fears over $5 gas have proven premature; average U.S. gas prices are$3.78 a gallon, down 15.5 cents from a month ago.
Meanwhile, big oil stocks are on the decline. Exxon Mobil (NYSE: XOM) is down 1.8% in early trading today. Rival Chevron (NYSE: CVX) has fallen 1.7%.
Summer is right around the corner, which means motorists will be taking to the roads on vacation. So demand for oil is likely to return as it always does during peak driving season.
We just might not see the cataclysmic gas prices some analysts were projecting back in February.