Petroleum prices have drifted down toward $70 a barrel in recent days from a record high last
month, as the summer driving season comes to a close.
Does this mean crude oil could fall to as low as $60 a barrel? Or is it more likely to reverse course and climb toward $80?
The price of gasoline at the pump is largely determined by the price of petroleum in the global market place, and a variety of difficult-to-predict factors, only starting with global demand, influences oil's trading value.
U.S. demand for oil often weakens in early autumn as the vacation season ends and the winter heating oil season has yet to begin. But it also is hurricane season
, which is a significant wild card.
Then there is the state of global geopolitical tensions and the trajectory of the world's economy, both of which go a long way toward determining the future price of oil.
Of all the possible variables, weather may be the key, believes James Cordier, head trader of Liberty Trading Group.
In August 2005, Hurricanes Katrina and Rita wrecked wells and refineries along the Gulf Coast, cutting output sharply from one of the most productive petroleum regions in North America. The price of oil jumped as a result.
By this time a year ago, the Atlantic Ocean had seen five hurricanes. So far this year, no hurricanes have formed.
Hurricane damage from last year still is being repaired.
On Thursday, for example, Total SA, a major French oil company
, announced that it finally was restarting its Matterhorn offshore oil platform
, which had been badly damaged. The Matterhorn, located 99 miles southeast of New Orleans, is able to produce 33,000 barrels of oil a day.
The benchmark price of crude oil closed at $70.06 a barrel, down $1.83 on Thursday, well below the record $77.03 close of July 14. Oil last closed below $61 on March 21.
In Illinois, the average price of regular gasoline Thursday was $3.13, below the record of $3.20 set Aug. 8, according to the AAA auto club. A year ago it was $2.684.
Pump prices in the city of Chicago are significantly higher because of taxes and other factors.