Crude oil (NYMEX:CLQ14) prices continue lower as a flood of Libyan oil supply is expected to overwhelm any loss of supply. This comes after the International Energy Agency lowered its oil demand expectations last week. The IEA cut its 2014 demand forecast to 9n.7 million barrels per day a drop of 130,000 barrels a day.
Yet geopolitical risks are still running high. Russia accused Ukraine of shelling and killing a civilian in a town inside Russia, in an incident that it said could carry "irreversible consequences" for Kiev as it stepped up air and artillery assaults on pro-Russian separatists over the weekend. Russia is said to be considering limited airstrikes in Ukraine.
Reuters is reporting that the average price of a gallon of regular gasoline in the United States fell 4 cents per gallon over the past three weeks inreaction to declining costs of crude oil, according to the Lundberg survey released on Sunday. Prices fell to an average of $3.67 per gallon for regular grade gasoline, according to the most recent survey, which was conducted on July 11. "Crude prices have dropped in reaction to Libya having sizably hiked its oil production, and because Iraq's oil output has not being smashed by violence and turmoil there," said Trilby Lundberg, publisher of the survey.
The price of Brent crude (NYMEX:SCQ14) in the United Kingdom has dropped by $8.35 per barrel in the past three weeks, while the price of West Texas Intermediate crude has fallen $6.43 during the same period, Lundberg said. About a fourth of the crude oil price decline is now reflected at the pump, but drivers could see another 4 cent to 8 cent drop in gasoline prices in the near future, as retailers pass along more of their cost savings to consumers, Lundberg said.