Oil prices continue fall as reality catches up with supply and demand

Prices for oil and gasoline, after stubbornly shrugging off recession concerns and pinching pocketbooks this year, have fallen more than 10 percent from their June peaks. Crude prices are now under $63 per barrel, more than $10 off a week earlier. Gasoline prices on the NYMEX have fallen more than 25 cents per gallon after briefly rising above $2.

Two energy analysts last month told DailyFinance that the energy markets are fundamentally very weak, but that concerns about the value of the dollar were pushing prices up. The dollar has held mostly steady since mid-June, and the halt in its decline has taken the wind out of the energy bulls' sails. Inventories continued to grow even entering the supposedly heavy demand period from summer vacationers, and AAA estimated that the weak economy would dampen July 4th holiday travel by about two percent from last year. The Department of Energy estimates that liquid petroleum use will be down more than three percent this year.