NEW YORK - As energy prices surged this month, economists told motorists to brace for the return of US$3-a-gallon gasoline in the United States.
But that's hardly a guarantee, especially after a three-day sell-off that pushed oil and gas prices to their lowest levels of the year.
"If oil prices have peaked, maybe $3 isn't a foregone conclusion," PFGBest analyst Phil Flynn said.
Energy prices rallied this winter as frigid temperatures blanketed parts of the country. China also said last week that it increased oil imports by nearly 14 per cent in 2009, fuelling expectations that world oil demand will continue to grow.
Crude, which jumped to a 15-month high on Monday, tugged retail gas prices higher as well. Pump prices increased again overnight by less than a penny to a new national average of $2.757 a gallon, according to AAA, Wright Express and Oil Price Information Service.
A gallon of regular unleaded is 15.4 cents more expensive than last month and 96.7 cents more expensive than a year ago.
In Canada, the price of gas averaged C$1.02 per litre, up from 98.2 cents per litre a month ago, according to price-watching website GasBuddy.com.
But oil prices started falling this week as temperatures warmed up and China announced that it would try to cool bank lending. An Energy Information Administration report pushed prices even lower Wednesday. The EIA said the nation's oil supply swelled by 3.7 million barrels last week, well above the average for this time of year. Gasoline supplies grew by 3.8 million barrels.
U.S. demand for petroleum products also fell by nearly one percentage point from last year, showing the country has an even smaller appetite for energy now than during the recession.
Prices tumbled shortly after the report.
Benchmark crude for February delivery gave up US$1.14 to settle at $79.65 a barrel on the New York Mercantile Exchange. Crude fell as low as $78.37 earlier in the day.
In other Nymex trading in February contracts, heating oil fell 3.72 cents to settle at $2.0946 a gallon and gasoline dropped 3.76 cents to settle at $2.0602 a gallon. Natural gas futures added 14.2 cents to settle at $5.733 per 1,000 cubic feet.
In London, Brent crude for February delivery fell 99 cents to settle at $78.31 a barrel on the ICE Futures exchange.
Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.