Oil Prices Down 17% in May

Crude oil prices closed at less than $87 a barrel, finishing the month at its lowest point since October.

Oil prices fell 17% in May – the most precipitous monthly drop since December 2008.

Oil futures started the month at $106 a barrel and remained above triple digits through the first week of May. But by the second week of the month, oil prices had dipped below $100 a barrel for the first time since mid-February. Oil has truly nosedived this week, falling nearly $5 since Tuesday.

Sovereign debt problems in the euro zone and slowing economic data in the U.S. helped push oil prices lower. Spain has joined Greece in the ranks of the most debt-ridden European countries. Meanwhile, the U.S. economy grew just 1.9% in the first quarter – less than the 2.2% growth that was previously reported.

With oil falling, gas prices are much cheaper than they were two months ago, when oil breached $107.50 a barrel. Average gas prices in the U.S. are down to $3.63 per gallon, or roughly 30 cents lower than they were in early April.

Of course, recent history tells us that oil isn’t likely to stay down for long. Oil prices plummeted to $77 a barrel in early October at the same time that U.S. financial markets were tanking. Within six weeks, oil was back above $100 a barrel – where it largely remained until this month.

Keep a close eye on tomorrow’s U.S. jobs report. If the numbers are greater than the 160,000 to 170,000 new jobs range most economists are projecting, then another oil bounce-back might be just as swift as it was last fall.