U.S. gasoline prices tumble as Chavez exits

Hogskin

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I don't know about you guys, but I haven't seen any tumbling in gas prices.  Always hopeful, though.
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NEW YORK, April 12 (Reuters) - U.S. oil prices fell heavily for the second straight day on Friday as Venezuelan President Hugo Chavez' resignation eased disruptions at the key U.S. supplier and brightened drivers' hopes for cheaper gasoline at the pump this summer.

May crude on the New York Mercantile Exchange plunged $1.52 to $23.47 a barrel, the lowest price in five weeks and 18 percent down from recent six-month highs struck as concern mounted over oil supply in both Latin America and the Middle East.

Fears of an oil spike that might derail economic recovery eased as signs emerged that Venezuela will focus on lifting oil production instead of working with fellow producers in the OPEC cartel to hold prices high.

"If the price of oil and production remains near the present level, economic consequences should be manageable," Sung Won Sohn, chief economist at Wells Fargo in Minneapolis.

Venezuela's Chavez resigned after at least 10 people were killed by suspected pro-Chavez gunmen during a mass protest on Thursday. Businessman Pedro Carmona will lead a transition government before an election.

Worries that prolonged protests could choke the Venezuela's crude and gasoline supply to the United States evaporated as dissident employees at state oil company PDVSA headed back to work on Friday and pledged to return exports to normal.

Venezuela is the No. 3 gasoline supplier and No. 4 crude supplier to the nearby U.S market and last year accounted for 13 percent of petroleum imports in the world's largest fuel market.

NYMEX gasoline prices clattered 6 cents a gallon lower to 72.96 a gallon, taking losses in the last two days to more than 12 percent -- falls which will soon be felt at U.S. service stations.

The national pump price has increased 27 cents a gallon, or 24 percent, since early March to $1.413 a gallon, the Energy Department said late on Monday.

VENEZUELA/OPEC UNCERTAINTY

Falls accelerated as PDVSA's sales chief said the company should set its production according to market conditions and not OPEC cartel's quotas.

"Let's not talk about quotas. Let's talk about the possibilities Venezuela has in the petroleum business," said PDVSA's head of sales and refining Edgar Paredes.

When Chavez came to power in 1999 he ensured the Latin American producer cut output to respect its OPEC limits after years of quota cheating.

"This is the end of an era," said Roger Diwan of Washington's Petroleum Finance Company (PFC). "Clearly it hampers OPEC. The question is can OPEC cut efficiently now? It depends where we are in six months from now in Venezuela in terms of the legal framework and who's in power."

A heavy slide in Venezuelan output capacity during the Chavez years meant any new government would have to bide their time before repeating pre-Chavez policy, analysts said.

"They can't afford it. They have excess capacity and this transitional government is going to need money," said PFC's Diwan.

OFF HIGHS

Crude prices now are sharply off the highs of Monday when Iraqi President Saddam Hussein announced a month-long ban on exports in protest of Israel's military incursions into Palestinian territories.

Prices topped $28 a barrel last week as speculators anticipated the Middle East conflict might disrupt supplies, but hedge funds in the past two days have sold heavily to take profits.

Leading OPEC supplier Saudi Arabia on Tuesday sent reassurances to the market, saying it would guarantee world crude deliveries.

Dealers were keeping a close eye on Middle East developments as U.S. Secretary of State Colin Powell failed to secure any firm timetable from Israeli Prime Minister Ariel Sharon for an end to Israel's military offensive on the West Bank.

Dealers have found comfort in government data showing plentiful stocks in the United States, the world's largest importer, where fuel demand has suffered from a slowdown in commercial air travel since the Sept. 11 attacks on the United States.
 

Brad

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why is it always up fast $.30 in two weeks and it will drop at a rate of $.02 a week. But don't forget SUMMER is coming!!! And gas always go's UP in the summer!!
 

Rimrock

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Seems like they call a $.30 raise a "slight increase" and a $.04 drop is a drastic reduction ! :confused-yellow::hammer:

Play fair.
 

JBarn3

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Thats exactly (well at least partially) why I just bought a motorcycle. Can't beat 55-60 mpg and getting to ride in the carpool lane w/o a passenger.
 

Kernhuntr

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Looks like that huge 4 cent drop will be on hold. Chavez is President again....


Kernhuntr
 


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