Oil prices fell to near $109 a barrel Monday in Asia as gasoline jumped to average $4 a gallon in six U.S. states, raising fears higher fuel costs will undermine crude demand.
Benchmark crude for May delivery was down 58 cents at $109.08 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.55 to settle at $109.66 on Friday.
In London, Brent crude for June delivery was down 33 cents to $123.12 a barrel on the ICE Futures exchange.
On Sunday, New York became the sixth state to top $4 a gallon for the average price of gasoline, joining Alaska, California, Connecticut, Hawaii and Illinois, according to AAA’s Daily Fuel Gauge.
The national average for gasoline has increased for 26 straight days, and is now at $3.83 per gallon, up 29 cents from a month ago.
Some analysts expect rising global fuel costs will eventually hurt crude consumption and likely trigger a drop in oil prices, which are up 29 percent since mid-February. Crude jumped to $147 in 2008 and gasoline averaged as high as $4.11 a gallon before the U.S. economy plunged into recession in 2009.
“Springtime gasoline in the U.S. has never cost more,” energy consultant The Schork Group said. “Automotive diesel in the U.K. is at an all—time high and the price on the continent is fast approaching levels not seen since the 2008 bubble.”
However, energy department figures last week showed a large gasoline supply drop, suggesting higher prices still haven’t curbed consumer spending. Traders will be closely watching the latest inventory data scheduled to be released Wednesday.
In other Nymex trading in May contracts, heating oil rose 1 cent to $3.20 a gallon and gasoline was steady at $3.24 a gallon. Natural gas futures were down 1.7 cents at $4.20 per 1,000 cubic feet.
