Price of gas going down

The average retail price for gasoline dipped below $2.50 a gallon for the first time in two months Monday as swelling oil supplies and slumping demand overshadowed even a fire at a major U.S. refinery.

Gasoline demand is so weak that even "a material disruption to supply to one of the largest markets in the world barely registered with the speculators on the NYMEX," said analyst and trader Stephen Schork.

Gary Harris, of the North Carolina Petroleum Marketers Association, called the dip "a true sign of supply and demand."

Demand for gas has fallen and now the price of gas has gone down, he said.

The average price of a gallon of gas in the Triangle Monday was $2.42, about seven cents off the national average. Nationwide, gas is 11 cents cheaper per gallon than a month ago, and nearly $1.16 below what drivers were paying at this time last year.

Still, energy prices for the most part rebounded to start the week on the New York Mercantile Exchange, particularly crude, which hit a two-month low on Thursday.

Benchmark crude for November delivery rose 82 cents to settle at $66.84 a barrel.

Gasoline for October delivery on Nymex rose 1.75 cents to settle at $1.638 a gallon.

A couple of factors this week are helping to support futures prices, even though the government reported Wednesday that oil supplies increased by millions of barrels in the prior week.

An oil spill in the Houston Ship Channel over the weekend closed off a portion of the heavily trafficked canal, though Coast Guard officials say operations were minimally impacted.

More relevant were events oversees.

Crude prices last week had tumbled 8 percent in two days and appeared ready to fall further before world leaders at the Group of 20 summit issued a stern warning to Iran over a previously unknown nuclear facility. About 20 percent of the world's crude is carted through the Straits of Hormuz on Iran's southern coast and any showdown between the West and Iran could threaten that route.

But PFGBest analyst Phil Flynn said oil producers waiting in line ready to pick up that extra slack.

"Saudi Arabia has enough spare production capacity to replace Iran's exports two times over," Flynn wrote.

Concerns about any conflict, however, may have been enough to halt declining crude prices for the moment and could create a new floor for gasoline prices.

Natural gas prices continue to fall. Most trading has already moved onto the November contract, with the October contract expiring Monday. Prices for November delivery fell 11.8 cents to settle at $4.83 per 1,000 cubic feet with some key storage facilities nearing capacity.

In the U.S., the most closely watched economic indicator this week will be the Labor Department's monthly jobs report on Friday. Investors will also get reports on home prices, manufacturing, consumer confidence, construction spending and factory orders.

In other Nymex trading, heating oil gained 1.38 cents to settle at $1.6909 a gallon.

In London, Brent crude rose 43 cents to settle at $65.54 on the ICE Futures exchange.

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Associated Press Writers Pablo Gorondi in Budapest, Hungary, and Alex Kennedy in Singapore contributed to this report.