•••Knoxville gas prices resume falling
Knoxville area gasoline prices on Wednesday resumed their downward march falling 1.1 cents overnight to an average of $1.708 for a gallon of regular unleaded, according to the AAA Daily Fuel Gauge Report.
The average rose slightly on Tuesday, breaking a run of daily decreases that started in October.
Prices as low as $1.51 to $1.53 were reported in East Knoxville at Marathon, Mobil and Kroger filling stations on Asheville Highway near Interstate 40, according to the Web site Gasbuddy.com, where consumers post prices they have seen.
The Tennessee average on Wednesday dropped 1.1 cents to $1.672, the auto club reported.
Meanwhile, oil prices rose slightly Wednesday but remained near three-year lows as investors tried to gauge how much the slowdown in U.S. and Chinese economies will hurt demand for crude.
By midday in Europe, light, sweet crude for January delivery was up 12 cents to $47.08 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.32 overnight to settle at $46.96 after touching $46.82, the lowest level since May 20, 2005, when it traded at $46.20.
In London, January Brent crude rose 9 cents to $45.53 on the ICE Futures exchange.
“The rallies we’ve seen have been false rallies, relief rallies,” said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne. “The mood is overwhelmingly bearish at the moment.”
Investors have been discouraged by growing evidence that China’s economy, the world’s fourth largest, may slow more than previously expected. Property prices in China have plunged, leading analysts to expect a drop in construction, an important driver of Chinese growth.
“The gloomy economic outlook and the resulting sluggish demand picture remain one of the major reasons for the slump in oil prices,” said a report by JBC Energy in Vienna, Austria.
The World Bank last week cut its 2009 Chinese growth forecast to 7.5 percent, the slowest in almost two decades.
“There are much clearer signs that China is slowing, and this has caused the recent leg down in prices,” Pervan said. “The U.S. remains the major market, but the downturn in China is accelerating.”
Oil prices have fallen about 68 percent since peaking at $147.27 in July.
Wednesday’s weekly report by the U.S. Energy Department’s Energy Information Administration is expected to show a rise of 2 million barrels in crude oil reserves, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Platts also expects gasoline stockpiles to rise by 1.1 million barrels, distillate stocks to rise by 900,000 barrels and refineries to decrease capacity to 86 percent.
London’s Sucden Research also predicted that the EIA report, to be released at 1435 GMT (10:35 a.m. EST), would be “bearish,” was “expected to show further signs of weakening demand” and would limit gains in oil prices.
A production cut by the Organization of Petroleum Exporting Countries in October failed to halt the slide in prices, and now the group is asking non-OPEC producers for help.
OPEC President Chakib Khelil said Tuesday oil producers such as Russia, Norway and Mexico should “express their solidarity” with OPEC, either by joining the cartel or by following its reductions of output quotas.
Russian officials have said they are preparing a cooperation agreement with OPEC that could be examined at the cartel’s meeting this month in Algeria.
“If Russia cuts production, it gives a bearish signal because it shows Russia is clearly concerned about short-term weak demand,” Pervan said. “Russia only reacts under major duress.”
Markets will also be following this week’s release of U.S. unemployment figures, as well as Thursday’s expected interest rate cuts by the European Central Bank and the Bank of England for more clues about the direction of those economies.
“The rest of the week will remain volatile in global markets” as they react to the fresh economic data and the rate decisions, said Olivier Jakob of Petromatrix in Switzerland.
In other Nymex trading, gasoline futures fell 1.33 cents to $1.0450 a gallon. Heating oil was down 0.80 cent to $1.5752 a gallon while natural gas for January delivery slid 5.3 cents to 6.371 per 1,000 cubic feet.
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