New York City -
The price of a barrel of oil continues to decline, trading below $90 on Thursday, as the US oil supply hits 900,000, and is expected to grow another 750,000 according to oil analyst. The price of gas at the pump has likewise been dropping, with most areas of the country now seeing gas at $3.50 per gallon or less. The US has not seen this much oil on the market since 1990 when gas prices were a mere $0.99 cents.
Not since November 1st 2011 has prices been this low, with the benchmark U.S. crude falling $2.25, or 2.5 percent, to $89.60 per barrel. Other refined commodities such as heating oil, jet fuel and natural gas were also down.
Causing the over-supply are fears that Europe is sliding back into a deep recession, and OPEC countries like Saudi Arabia are pumping more than their quota to help the US get a grip on prices. Also, speculation that Iran will be able to keep selling oil during negotiations with western powers over its nuclear program have helped push prices down.
Also, oil speculators from large hedge funds have been bailing out of the market, further reducing contract demands and removing a middleman in the price/supply chain.
Saudi Arabia has stated that it would like to see prices around $80 for a barrel of oil, which would translate into about $2.80 to $3.20 per gallon at the gas pump. That is also the magic price most economist say is needed to really help the US economy fire up full strength and to propel the transportation industry into solid profits.