The price of oil is dropping rapidly.
May 5, 2012– This past week, the price of oil has plummeted 6% and erased fears of gas selling for $5 a gallon in the U.S. The price of crude dropped below the $100 per barrel mark on Friday. The price settled at $98.49 after opening the trading week on Monday at $104.87. Prices of oil are a good predictor of the price of gasoline, which often times mimics the fluctuations in the price of oil.
In early April, the average price of a gallon of gas in the U.S. peaked at $3.95. The price has been dropping steadily since that time. On Friday, the national average had dropped to $3.80 per gallon.
The closing price on Friday now has oil at prices from early February. In late February, oil peaked in price when it hit $109 per barrel. Brent Crude from the North Sea has been declining as well and dropped over 3% Friday to close at $112.20.
The usual spike in gas prices for summer travel happened earlier this year and caused demand to decrease. Demand overall worldwide has also decreased, as Asia is demanding less oil than in previous years.
In addition, the worry over Iran and the sanctions against the country causing a problem with oil have not been present of late. One reason is Iran backed away from its threat of shutting down the Strait of Hormuz.