Summers Arrival Means…Lower Gas Prices?

While summer time usually leads to car trips and vacations, the warm weather also ushers in higher prices at the pump. However, this year, many analysts are predicting that won’t be the case. Analyst’s who were predicting an average of more than $3 per gallon by Memorial Day, now state that prices have already peaked. Concerns about growth in the global economy and rising stockpiles of crude have helped send gasoline prices plummeting by an average 25 cents a gallon since last week. Since May 3, crude prices have fallen by 12 percent to $76.20 a barrel. Retail gasoline prices have dropped by 10 percent to $2.19 a gallon. As the BP BP rig continues to spill thousands of gallons of crude into the gulf, analysts estimate that this should have no effect on crude stockpiles, as there is an estimated 2.5 million barrels of crude stored in the region. The oil spill, while an environmental disaster, has had no effect on oil and gas prices within the United States. Investors wanting to play this short term drop in prices can add a short position in the United States Gasoline UGA. Investors may want to avoid, for now, the PowerShares Dynamic Oil & Gas Services PXJ and SPDR S&P Oil Equipment & Services XES and revisit them when at lower share prices.