Dollar makes a comeback and crude prices tumble

Crude prices have trended lower for well over than a month and grew even cheaper Monday, which might lead some to believe prices at the pump would follow along.

That’s not necessarily been the case so far.

Demand for gasoline, jet fuel and diesel is edging only slightly, but not enough for refiners to make much money so they’ve been cutting production to avoid losses.

Several refineries have completely shut down and while imports have helped push inventories of gasoline higher, gas prices have remained relatively flat during crude’s swoon.

Average regular gasoline prices edged down less than a cent overnight to $2.632. A gallon costs slightly more than it did last week, but almost 90 cents more than it did at this time last year, according to auto club AAA, Wright Express and Oil Price Information Service.

Benchmark crude for January delivery fell 2 percent, or $1.54, to settle at $73.93 on the New York Mercantile Exchange, the lowest level in about two months.

Energy experts say that at some point, fuel prices are going to have to rise or crude prices are going to have to fall.

It’s been the latter in recent days and the rebounding dollar may be the best ally that motorists have right now.

The dollar traded higher than it has for a month against the euro Monday and crude prices fell sharply, demonstrating how much heft the dollar has in energy markets.

Oil is bought and sold largely in dollars and this year the dollar has taken a beating compared with currencies like the euro. That has allowed investors holding euros and other stronger currencies to buy a lot more oil for less and they have.

While that has driven the price of crude higher, the same cannot be said for gasoline because the demand isn’t there. That is why energy experts believe something’s got to give.

With the crude falling as the dollar rises, that may finally be happening.

Consumers that want to get an early indication of where the price of gasoline, diesel and other fuels are going in the coming weeks might want to watch the movement of the dollar. The rising dollar on currency exchanges could mean more bang for the buck on your pocket at the gas station.

In other Nymex trading in January contracts, heating oil fell 1.71 cents to settle at $2.0097 and gasoline slipped 3.44 cents to settle at $1.9406. Natural gas jumped 38.5 cents to settle at $4.971 per 1,000 cubic feet.

In London, Brent crude for January delivery lost $1.09 to settle at $77.53 on the ICE Futures exchange.

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