Crude oil prices fell below $125 yesterday for the first time in more than six weeks, with light, sweet crude for September delivery falling $3.98 to settle at $124.44 a barrel on the New York Mercantile Exchange.
Oil prices, which hit a record high above $147 a barrel less than two weeks ago, have now fallen in six of the last seven sessions.
Among the factors reportedly at work are a stronger dollar, reports that people are using less gasoline as evidenced by a larger-than-expected increase in U.S. gasoline inventories, fears that the slowing U.S. economy could trigger a worldwide economic slowdown and therefore affect oil demand, indications that tensions were easing between oil-producer Iran and the U.S. over Iran's nuclear program, and news that a Chevron oil pipeline in Nigeria had reopened following an attack on it in June.
Meanwhile, the debate on the role speculators have had in the run-up of oil prices continues. The Senate voted unanimously Tuesday to move forward with debate on legislation to curb speculation in energy markets as lawmakers seek to respond to record oil prices. But a new government report says that fundamental supply and demand factors provide the best explanation for the recent crude oil price increases, not speculators.
The Interagency Task Force on Commodity Markets, chaired by the Commodity Futures Trading Commission, studied fundamental supply and demand factors and the roles of various market participants. The task force is composed of staff members from the Departments of Agriculture, Energy and the Treasury, the Board of Governors of the Federal Reserve, the Federal Trade Commission, and the Securities and Exchange Commission.