Lower oil prices here to stay?
The price of oil dropped this week to $127 a barrel, and there's reason to believe it may stay lower. Jeremy Hobson gets feedback from an oil analyst who says oil prices have traditionally been higher around Memorial Day.
A gas price display is changed at a Chevron gasoline to display a record high. (Justin Sullivan/Getty Images)
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Scott Jagow: But the price of oil has fallen $6 this week. It's at $127 a barrel this morning. I wouldn't get too excited, but there is reason to think the price drop might stick. Here's Jeremy Hobson.
Jeremy Hobson: Analyst Tom Kloza at the Oil Price Information Service says just look at the calendar. For 23 of the last 26 years, he says, the peak in oil prices has come right before Memorial Day.
Tom Kloza: History's on our side here, although this has been a year that's thrown us quite a few head-fakes. So it's a little bit premature to say that maybe that big bull run for the first part of 2008 is over.
Now, there are all sorts of things that drive the price of oil. The strength of the dollar, speculation, and lately, dropping demand in the U.S.
Kloza: We're also getting the sense now that maybe the rest of the world is slowing down a little bit as well -- $135 for crude was an awfully high number.
In other words, don't think of this as the start of a bear market -- rather, a correction. In terms of what's ahead, Kloza says:
Kloza: I expect chaos, but I'm tired and I would really welcome some order right now.
In Washington, I'm Jeremy Hobson for Marketplace.
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