Oil prices have eased amid a growing sense that soaring gas and oil prices have cut demand for fuel during the normally busy summer driving season. At the pump, meanwhile, retail gasoline prices rose, but only slightly. That's leading to renewed speculation that gas prices may follow the normal seasonal pattern of peaking around Memorial Day, then declining over the summer. The decline comes despite news of supply problems in Mexico and Nigeria. The average national price of a gallon of regular gas rose only 0.1 cent overnight to under $3.94, according to a survey of stations by AAA and the Oil Price Information Service. Crude oil futures prices ended sharply lower on the New York Mercantile Exchange. The near-month contract for the benchmark grade fell $3.34--closing at $128.85 a barrel.
A private research group says that soaring gas prices and weakening job prospects left shoppers gloomier about the economy in May, sending a key barometer of consumer sentiment to its lowest level in almost 16 years. The New York-based Conference Board said that its Consumer Confidence Index dropped to 57.2, down from a revised 62.8 in April. Economists surveyed by Thomson Financial/IFR had expected a reading of 60. The May reading marks the fifth straight month of decline and is the lowest since the index registered 54.6 in October 1992, when the economy was coming out of a recession.
The government says sales of new homes rose in April for the first time in six months. Even with the unexpected increase, sales remained at a depressed level. The Commerce Department reports that sales of new homes rose 3.3 percent in April to a seasonally adjusted annual rate of 526,000 units. At the same time, March activity was revised lower to show an even bigger drop of 11 percent to the weakest sales pace since April 1991. Economists believe that new home sales will remain weak for some time as the housing industry struggles with falling prices and rising mortgage foreclosures, dumping more homes on an already glutted market.
A closely watched housing index shows U.S. home prices dropped at the sharpest rate in two decades during the first quarter. The Standard & Poor's/Case-Shiller U.S. National Home Price Index fell 14.1 percent in the first quarter compared with a year earlier. Its narrower indices also set record declines. The 20-city index tumbled 14.4 percent during the quarter. The ten-city index plunged 15.3 percent, a record in its 20-year history. "There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path," said David Blitzer, chairman of S&P's index committee.
The Justice Department has settled a lawsuit against a group of real estate agents who were accused of illegally blocking Internet-based brokers from accessing home listings. Government attorneys say such practices limit competition among real estate agents and put online brokers at a disadvantage. Online agents often charge lower fees and allow consumers to review listings at their own pace. The settlement forces the National Association of Realtors to stop blocking the posting of home listings on Web sites. The Washington-based lobbying group eased some of its policies against online brokers when the Justice Department filed suit in September 2005.
American Airlines has rejected its pilot union's contract proposals after determining the cost would be too high. Fort Worth-based American says the proposals would increase its annual pilot costs by roughly $3 billion in recurring expenses. The nation's largest carrier is facing the possibility of a future cash crunch amid soaring fuel prices. The Allied Pilots Association immediately shot back, seeking to know from management if its rejection means the talks are at an impasse. Union spokesman Scott Shankland said the airline rewarded top management when the airline's performance improved. But it hasn't given pilots back what the pilots gave up when American teetered on the verge of bankruptcy five years ago. The pilots' 2003 contract with American became amendable on May 1st.
One man who knows a lot about money says the U.S. economy is in a recession. Warren Buffett was asked by the German magazine Der Spiegel whether he thinks the U.S. could still avoid a recession. And he replied that as far as the average person is concerned, it's already here. Buffett is quoted as saying that it may not be a recession as defined by economists, but that "people are already feeling the effects of a recession." And he added, "it will be deeper and longer than what many think." Buffett went to Europe for what he called a "deferred shopping tour," looking for possible acquisitions.
Moody Gardens reports a 20 percent increase this year in Memorial Day weekend visitors, compared with last year. About 70 percent of visitors came from the Houston market. General Manager John Zendt says he expects to see even more Houstonians this summer as people choose vacations closer to home because of gasoline prices.
European oil field contractor Expro postponed a shareholder meeting to approve a takeover bid from a private equity consortium. That's after the equity group raised its offer to $3.43 billion to block a rival approach from Houston-based Halliburton. Expro International Group said it's delaying the meeting originally scheduled for June 2nd to June 9th to give shareholders "sufficient opportunity to consider the revised offer." Expro found itself at the center of a bidding contest on Friday when Halliburton tried to sour a deal with UmbrellaStream Limited, which last month made a $28.36-per-share per share offer. Halliburton topped that offer Friday with an all-cash bid of $30.14 per share, or $3.36 billion. UmbrellaStream responded by upping its previous bid by more than eight percent to $3.43 billion. A statement from Expro recommended shareholders accept the revised UmbrellaStream proposal. Halliburton said it was aware of the new bid by UmbrellaStream and said it was continuing to talk with Expro. Halliburton revealed its interest in Britain's Expro last month.
Hundreds of trucks Tuesday jammed a major route into London in protest of skyrocketing diesel prices. Around 300 lorry drivers honked their horns and parked on a highway on the edge of the city. They forced police to close off a section of road and divert hundreds of motorists during the busy morning rush hour. Truckers protesting the soaring cost of fuel in Britain called for Prime Minister Gordon Brown's government to lower fuel taxes for trucking companies. Diesel in Britain now costs the equivalent of more than $9 a gallon. Trucking company owner Peter Carroll says the industry can't keep up with rising costs. He says hauling companies would like to see a rebate equivalent to nearly $2 per gallon, a deal similar to the terms offered to bus companies.
Investors have plenty of economic data to mull over this week, although packed into four trading days. A revised look at first-quarter growth is due Thursday, along with weekly jobless claims. Rounding out the week Friday, readings are due on personal income and spending, along with a look at consumer sentiment from the University of Michigan.