Gas prices tumble sharpest on record.

[SirNitram]

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NEW YORK (AP) -- The price of oil recorded its biggest weekly drop ever, and a gallon of gas finally pulled back from its record high. So is it time to declare the energy bubble popped?

Experts won't go that far just yet.

"It's too early to say we've seen the worst of it," said Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service in Wall, N.J. "We would be Pollyannish if we believe one week represents a trend."

Still, with oil recording yet another drop on Friday, some industry experts who just days ago thought there was more juice left in oil's meteoric run are reconsidering.

"If this is not the bubble's implosion, than it's a reasonable facsimile," analyst and trader Stephen Schork said in his daily market commentary. "Time will tell. Nevertheless, for the time being we no longer care to hold a bullish view."

Light, sweet crude for August delivery fell 41 cents Friday to settle at $128.88 on the New York Mercantile Exchange - well below its trading record of more than $147 a week earlier.

The average price of a gallon of regular gas fell about a penny for the day, to $4.105, according to auto club AAA, the Oil Price Information Service and Wright Express. Diesel prices dipped three-tenths of a cent to $4.842 a gallon.

Some analysts said a nationwide average of $4 or even lower could be in the offing - almost unthinkable in a summer when there has seemed to be no relief at the pump - although they cautioned that there is no guarantee prices will stay low.

"We're going to see some relief from that relentless march higher," Kloza said.

Gas may be getting just a bit cheaper, but major changes in how Americans live and drive are already in motion.

Car buyers have been fleeing to more fuel-efficient models. U.S. sales of pickups and sport utility vehicles are down nearly 18 percent this year through June, while sales of small cars are up more than 10 percent.

While slashing production of more-profitable trucks and SUVs, automakers have been scurrying to build their most fuel-efficient models faster.

Toyota Motor Corp., which hasn't been able to keep up with demand for its 46-miles-per-gallon Prius hybrid, said last week it will start producing the Prius in the U.S. and suspend truck and SUV production to meet changing consumer demands.

Ford Motor Co. and General Motors Corp. also have announced plans to increase small car production, and GM has said 18 of the 19 vehicles it is launching between now and 2010 are cars or crossovers.

Some brave traders used the week's pullback in oil prices as a chance to buy barrels that suddenly seemed to be on sale. But oil analysts were advising investors to beware.

"Buying here is an opportunity if you are a deep believer in $200 (a barrel), otherwise we think that caution would be better applied," analyst Olivier Jakob of Petromatrix in Switzerland said in a research note.

If oil buyers sense that the slide was overdone, you'll probably notice at the pump quickly.

"If (oil prices) rebound, you're going to see a quick reaction at the gas station, because their profit margins are so stretched," AAA spokesman Geoff Sundstrom said. "They may be very fast bringing prices back up."

In other Nymex trade, heating oil futures fell 5.23 cents to settle at $3.6915 a gallon while gasoline futures edged up 0.73 cent to $3.1709 a gallon. Natural gas futures rose 3.3 cents to $10.57 per 1,000 cubic feet.

In London, Brent crude futures for September delivery rose 88 cents to settle at $130.19 on the ICE Futures Exchange.

My guess is the delayed demand destruction and worries of even further demand destruction popped the bubble that sits atop the fundamental climb. There will be some brief stability, maybe a few small drops, then it will rise again. But that's my guess.

[Bluewolf]

Pretty much the calm before the storm. I expect it to keep rising massivly and then falling slighty down again. I bet many will be using drops like this to claim that the oil crisis is will be alright in the end.

[Phantasee]

Oh, it's just a breather, so we can start hoarding, driving the price up again.

At least, that's my plan.

[The Duchess of Zeon]

Notice how oil hasn't gone below $125.00 a barrel.

[Knife]

Meh, blip because people are just starting to realize the perdiciment we're in. Didn't stop all of them to buy less gas, just plan a bit more. This is the first, imo, record of a bit of conservationism.

[Surlethe]

Notice how oil hasn't gone below $125.00 a barrel.

Just curious: is that number any more significant than $130/bbl?

[Sea Skimmer]

The combination of a speculation bubble, and the passing peak of summer demand was always bound to cause a price drop; this is actually more then I expected. Still, just wait until everyone starts ordering home heating oil for the winter. That’s going to start the push.

[Ypoknons]

Fundamental demand increases are still there. China and India aren't going to stop growing any time soon, for example.

[The Duchess of Zeon]

Notice how oil hasn't gone below $125.00 a barrel.

Just curious: is that number any more significant than $130/bbl?

It's just a quarter-hundred, a major landmark as counting goes, though there's a couple alternative methods that do come into viability IIRC around $120/bbl, so if we stay permanently above that, useful.

[Admiral Valdemar]

Higher price swings were to be expected, this is simply part of what many predicted, just as higher precipitation and erratic weather patterns are for climate change.

It's still around the 40 day moving average.

[Butterbean569]

Bought some USO stock Friday on this dip...it'll be back up to $140 in a week or two.

Gas was down about 30 cents here in Indianapolis and there were some decent sized lines at the gas station