Oil slide may bring slight relief at the pumps

NEW YORK (Reuters) - Drivers could get a little reprieve from record high gasoline prices for the remainder of the summer thanks to a steep drop in the price of oil, some industry watchers said on Friday.

Oil prices fell about $17 this week from last Friday's all-time peak over $147 per barrel, marking the steepest week-long decline in the history of oil futures trading, giving Americans already facing a troubled economy some hope that a gallon of gasoline could fall back below $4.

"If the current trend for pricing is sustained for two weeks of trade, I think it is safe to say the pattern has been set for lower prices going forward in the summer," said Geoff Sundstrom, a fuel price analyst for travel and car group AAA.

"If we see crude maintained at $130 going forward, we will see retail gasoline fall to $4 or below pretty quickly," he added.

Retail prices for gasoline have already begun to inch down fractions of a cent in most cities, but at a nationwide average of $4.113 a gallon, prices are well above the $3.049 of the same time last year, U.S. government data showed.

Analysts said the drop in crude oil prices -- the main component in the price of gasoline -- is due largely to mounting evidence that drivers are cutting down on road travel due to the soaring costs at the pumps.

According to the most recent U.S. inventory data report, year-on-year gasoline demand fell for the 12th straight week and for the 24th time this year, according to Stephen Schork, editor of the Schork Report.

But industry watchers are divided over whether any decline in retail gasoline prices will be sizable.

"Only a few cents relief, at most," said Mike Fitzpatrick, vice president, energy risk management, MF Global, adding he expects prices to rebound in the fall.

That crude prices could rally and begin to ascend again is a real possibility, some traders think, making lower gasoline prices a fleeting phenomenon.

"Each time it's turned around and pushed higher," said Kyle Cooper of IAF Financial Advisors of the behavior of crude after price dips.

Cooper said that since 2003 there have been quite a few corrections from record high prices that have lasted for varying amounts of time, making it difficult to gauge how long or deep this dip in crude and gasoline prices will be.

"I do think the demand destruction is starting to have a little more impact. I do think it is more likely this is the top than previous ones. But we are now $20 higher than the last time we pulled back," he said.

(Editing by John Picinich)