Consumer Bonus: Oil Challenging $80/Barrel and Gasoline Challenging $3.50/Gallon

Maybe you want to blame the rising dollar or maybe you want to blame continued slow weakness along with a building inventory report.  Oil is now within striking distance of the $80 per barrel mark in the United States again.  Even the more expensive Brent North Sea Crude hit a 17-month low at $92.70 per barrel as the spread between WTI and Brent narrows.

Oil via WTI Crude was down 4% at $80.97 on last look, so it is less than $1.00 now rom breaking under the $80.00 mark. The United States Oil (AMEX: USO) is down 3.8% at $30.46 right at the closing bell.  Today’s DOE report showed a large build in oil inventories rather than a drop of 1 million which had been expected.

Also, the United States Gasoline (AMEX: UGA) was heading south with gasoline as the price at the pump has been in decline for seven months now.  Gasbuddy.com now shows that the average price is around $3.51 for a gallon of unleaded gasoline.  That is the lowest price since February and chances are growing that with a lag in the price of oil and the price at the pump that prices may drop for a few more days even if oil starts to stabilize.

Phillips 66 (NYSE: PSX) has managed to hold up rather well as Wall Streets used to it trading independent of ConocoPhillips (NYSE: COP).  Conoco shares followed oil today with a 2.1% drop, but Phillips 66 shares rose 2.4% to $34.67 today.

Another beneficiary is United Continental Holdings, Inc. (NYSE: UAL).  If one industry loves lower oil prices it is the airline sector. If we can just keep the Europeans from getting drug too deep into the mud by their PIIGS, then maybe all this lower and gasoline will help out retail sales.  It is probably no accident that Wal-Mart Stores Inc. (NYSE: WMT) closed up 1% at $68.52 and that is 4-cents above its prior 52-week high.

JON C. OGG