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Lower oil prices slowly getting to the gas pump

Last week's big sell-off in oil markets is slowly making its way to drivers in the form of cheaper gasoline prices.

Pump prices have dropped 2.1 cents per gallon after hitting a national average of $2.928 a gallon on Thursday, the highest price since October 2008, according to AAA, Wright Express and Oil Price Information Service.

Oil prices tumbled 14 percent last week amid worries about the European debt crisis, a rally in the dollar and the sharp sell-off on Wall Street.

Many analysts who predicted that retail gasoline prices would top $3 per gallon for a short time this summer now are looking for prices to move lower or at least stabilize heading into the summer driver season.

"I think the highs are in the for the next 100 days," said Tom Kloza of Oil Price Information Service.

Oil prices did bounce back from last week's sell-off after the European Union Commission and International Monetary Fund pledged a loan package of nearly $1 trillion to help resolve Europe's debt crisis.

The package is meant to stabilize the euro, which on Monday bounced back from a 14-month low against the dollar that it hit on Friday.

Commodities priced in dollars, such as oil, become less expensive for investors holding euros as the dollar weakens.

Benchmark crude for June delivery rose $1.40 to $76.51 on the New York Mercantile Exchange. The June contract fell $2 to settle at $75.11 on Friday. It was as high as $87.15 a week ago.

Rising oil prices Monday are not expected to stop the slide in gasoline prices into summer, analysts said.

"We're not seeing the big rebound negate the downward pressure on retail gasoline prices," said Geoff Sundstrom of AAA. He said prices should at least be stable if not lower through Memorial Day.

Gasoline prices fell 0.6 cents overnight to a national average of $2.908 a gallon. Prices are 4.5 cents higher than a month ago and 79.5 cents higher than a year ago, but motorists in some parts of the country already are seeing a break of 10 to 15 cents per gallon from the peak.

The Energy Information Administration will release its weekly report on gasoline prices later Monday.

In other Nymex trading in June contracts, heating oil rose 3.64 cents to $2.1159 a gallon, and gasoline added 3.89 cents at $2.1640 a gallon. Natural gas gained 16.1 cents at $4.176 per 1,000 cubic feet.

In London, Brent crude climbed $1.51 to $79.78 on the ICE futures exchange.

Associated Press writers Pablo Gorondi in Budapest and Alex Kennedy in Singapore contributed to this report.

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