Has this news made a significant difference in the gas prices yet?
NEW YORK (CNN/Money) - Oil futures fell as low as $63.10 a barrel Thursday before rebounding, after a report showed a smaller-than-expected drop in petroleum stockpiles following major disruptions in the wake of Hurricane Katrina.
At 11:05 a.m. ET, U.S. light crude for October delivery was down 27 cents a barrel to $64.10 on the New York Mercantile Exchange, having fallen more than $1 immediately after the government report.
Gasoline futures also tumbled immediately after the 10:30 a.m. ET report, down by as much 9.5 cents from session highs on the NYMEX to $1.97 a gallon. But they rebounded to trade just 0.22 cent lower at $2.02 a gallon, still about a nickel off the day's peak.
Crude stocks fell by 6.4 million barrels, gasoline stocks fell by 4.3 million barrels and stocks of distillates decreased by 800,000 barrels, according to the Energy Information Administration.
Analysts were looking for a drop of 6.4 million barrels of crude, 6.2 million barrels of gasoline and 2.6 million barrels of distillates, according to Reuters.
The slide in crude prices continues the trend for the last several days.
Oil has now lost more than $6 since hitting an all time trading high of $70.85 on NYMEX Aug. 30th, the day after Hurricane Katrina slammed into the Gulf Coast, killing hundreds or perhaps thousands, flooding New Orleans and causing widespread destruction in Louisiana and Mississippi.
Hard hit were oil platforms and pipelines in the Gulf of Mexico and refineries onshore. The Gulf accounts for one quarter of all U.S. domestic oil production and has the country's only deep water port for oil imports.
Prices have fallen over the last several days as refineries came back online sooner than expected and the International Energy Agency released around 60 million barrels of products from the reserves of its 26 members worldwide, including 30 million barrels of crude from the U.S. Strategic Petroleum Reserve.
But traders were especially watching the gasoline component of the report, as most of the reserves from IEA are in the form of crude and the storm worsened an already tight supply of refined products worldwide that has helped push U.S. gasoline prices up over 65 percent in the last year.
Gasoline prices hit consumers directly and can limit their spending, which accounts for two thirds of U.S. economic activity.
Economists warned Wednesday that the economic fallout from Katrina could cost 400,000 jobs and shave up to 1 percent off the country's gross domestic product in the second half of 2005, largely due to rising energy prices.
NEW YORK (CNN/Money) - The pain of $3 at the pump could end soon for many Americans, but the respite in gasoline prices may be modest -- and only temporary, energy experts said Wednesday.
In any event, gasoline prices rarely fall as quickly as they go up, so consumers should get used to higher prices at the pump.
The disruptions to gasoline supplies and U.S. refining capacity that helped drive gasoline prices to record highs are being fixed. But the wider-than-normal gap between wholesale and average retail prices was driven in large part by those supply disruptions, according to the Geoff Sundstrom, a spokesman for AAA.
"With each passing day, based on what we're hearing about the industry being restarted, this current environment will ease," said Sundstrom.
He said that there is normally about a 60-cent difference between wholesale prices and retail prices, with the difference going to distribution, marketing and profits for station owners. But the gap has risen to nearly $1 in the last week after Katrina, he said.
And it could be a while before prices fall back to around $2.60 a gallon, where they stood on Aug. 26, before the storm hit.
"We may be a couple of weeks away from seeing meaningful relief," he said.
In commodities markets, gasoline futures fell Wednesday along with crude oil prices ahead of the weekly U.S. fuel inventory due Thursday morning.
Crude oil futures rose less than gasoline futures after Katrina, and have fallen much more quickly, retreating to pre-Katrina levels on Monday.
But Sundstrom said that oil companies are keeping many gasoline stations on limited allocations of motor fuel, prompting station owners to raise prices more quickly, and bring them back down more slowly.
Some independent station owners have seen only a fraction of their normal supplies and there have been scattered reports of stations running out of gas.
"Basically what is happening is the industry is trying to stop a run on wholesale gasoline by gas stations," said Sundstrom. "The gas station owners don't want to under price the market and possibly run out of gasoline."
Richard Karp, spokesman for the American Petroleum Institute, said the industry group can't give any forecasts on prices or spreads between wholesale and retail prices.
"Clearly the hurricane's impact on the refining and distribution network has impacted prices," he said. "As the situation improves, as it has over the past week, it'll impact the parts of the country positively that have felt the greatest impact."
But while many of those station owners' supply limits on gasoline are being lifted as more normal operations resume, other experts say it's possible that the resumption of production at refineries along the Katrina-ravaged Gulf coast could take longer than expected.
Some say there could be a new climb in crude oil and gasoline prices ahead, even if no more storms hit the region.
"I think within a couple of weeks, (gas) prices will revert to pre-Katrina levels," said A. F. Alhajji, a professor at Ohio Northern University. "But I also believe oil prices will go up again."
Alhajji points to the example of a year ago, when Hurricane Ivan hit the Florida panhandle on Sept. 21, 2004. It is credited with lifting crude oil futures to what was then a record high of $55.67 on Oct. 25, a full month later, as the full impact of the storm on supplies became more apparent.
Alhajji said one thing that may spare consumers from a rebound in gasoline prices above $3 a gallon is that there are growing imports of gasoline, rather than just crude oil, in reaction to Katrina's impact.
He said there was a trend toward importing more gasoline even before the storm and the hurricane could help fuel that trend. But he said it's too early to say if the increased imports are enough to keep pump prices in check.
"When it comes to gasoline, it's hard to predict," he said.
Oil analyst Peter Beutel, president of Cameron Hanover, said it's difficult to say what will happen to gasoline, though he also expects some relief at the pumps in the coming days.
"It's going to take a long time before we know exactly how to look at this, what effect Katrina is having long-term," said Beutel. "I would like to say for now at least the worst is behind us. What tomorrow brings, particularly on the weather front, remains to be seen. We're still in a tight situation."