Light sweet crude started dropping on Monday morning dropping below the $48 mark more than once and going as low as $47.70. Gasoline also continues to slide down 3 cents to $1.38 a gallon. Prices continues to drop because OPEC continues to keep oil production wide open and near capacity to its highest levels in 25 years.

Over the weekend, OPEC chief and Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah told Reuters over the weekend that OPEC would continue to produce over the stated quotas and keep the current 30 million bpd limits and that $40 a barrel was a good price for benchmark crude.

IEA Info

The IEA said last week that oil consumption was slowing down worldwide. U.S. consumption dropped by 90,000 to 250,000 bpd or a 1.7% drop. Chinese economic growth, while still going, didn’t climb nearly as much this year limiting their projections 470,000 bpd, this 7.4% is less than half of last years 16% from last year. Europe really bottomed going down 170,000 bpd, down 1.1% from last year.

Also, the U.S. Dept. of Energy said during the last weekly energy report that inventories continued to swell marking 12 out of the last 13 weeks inventory has grown. Gasoline inventories also continue to grow although not nearly as much.

Oil refineries in the U.S. continue to have problems as well. Conoco/Phillips continues to have problems; this time with power and repairs will take another week to repair. This adds on to the downtime they suffered last month for unforeseen maintenance problems. Sunoco also had a reformer problem and it’s caused a slowdown for them too.

What It Means

The U.S. economy has shown some signs of strengthening. Oil prices continue to drop slowly and this is being reflected at the pump. According to GasPriceWatch.com, the national average’s $2.09 a gallon, down almost 20 cents from less than a month ago. OPEC’s words of encouragement should continue to drive prices down. The trickle down effect should eventually show in a number of areas as the price indices should also show some signs of dropping

The trade deficit improved last week after U.S. reports showed exports were up and the U.S. dollar strengthened against other reserve currencies. Shrinking gas prices and an improving trade deficit should help curb inflation and spur stronger economic growth over the coming months.

The coming months will tell much as the summer driving season begins in the U.S. in about two weeks. Many travelers have said rising fuel costs will keep them closer to home this year. If the fuel costs continue to drop, then perhaps they will alter those
plans.

John Stith is a staff writer for webproworld covering technology and business.