Area gas drops about a nickel to $2.68 range

Louisville-area gasoline prices were about a nickel per gallon lower yesterday as oil prices held above $64 per barrel despite news of Iran’s release of 15 British sailors.

The U.S. government reported yesterday that the nation’s gasoline inventories declined for the eighth week in a row and that demand is still strong. That helped push wholesale gasoline prices up more than 4 percent and supported oil prices.

Gasoline in Louisville was selling for an average of $2.68 yesterday morning, AAA reported. By later in the day, prices ranged between the low $2.50s and nearly $2.70 per gallon, with the lowest prices south of downtown.

Oil dipped 26 cents per barrel to finish at $64.38 at the New York Mercantile Exchange. Traders have only shaved off part of the nearly $5 premium they added to crude futures after the sailors were captured March 23.

Wholesale gasoline prices soared 8.77 cents to $2.1054 a gallon yesterday in New York trading. They have risen more than 30 percent since the beginning of the year.

Because gasoline futures keep rising, “we’ll probably maintain pump prices at the recent highs,” said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill. “Generally, this year’s spate of refinery issues has been more pronounced than what we usually see.”

U.S. crude-oil inventories rose by 4.3 million barrels to 332.7 million barrels last week, according to the Energy Information Administration, while gasoline inventories dropped 5 million barrels to 205.2 million barrels. The drop was much larger than the market had anticipated and pushed gasoline inventories into the lower half of their average range for this time of year.

Over the last four weeks, gasoline demand has averaged nearly 9.3 million barrels per day, the EIA said, which is 1.7 percent above the same period last year.

Concerns about tight domestic supplies offset much of the relief over Iranian President Mahmoud Ahmadinejad’s release of the British sailors, who Tehran claims entered Iranian waters. The area in question is near Iraq along the Strait of Hormuz, a key channel through which many oil tankers pass.

The Associated Press and Dow Jones Newswires contributed to this story.

Information from: www.courier-journal.com