Aug. 28--In the short term, oil prices should decline, but long-term prices will be too volatile to predict, said Mustafa Mohatarem, chief economist at General Motors Corp.

The price of light sweet crude oil for October deliveries rose $1.88 Wednesday to settle at $118.15 a barrel on the New York Mercantile Exchange. But that's much lower than its peak above $140 earlier this summer.

"Trying to forecast oil prices right now is a huge challenge," Mohatarem said.

High oil prices, which translated to $4-a-gallon gasoline, have prompted Americans to cut back on their consumption. This decreases demand and lets prices fall, at least a little.

Another short-term reason for the decline in oil prices is a slowdown in purchases from China, Mohatarem said during a conference of the Society of Automotive Analysts on Wednesday in Troy. Some Chinese corporations stocked up on diesel fuel as an energy source in preparation for the 2008 Olympics, so they won't have to buy more in September and October.

Still, the direction of oil prices in the future is too hard to predict. The weather, for instance, will play an important role, Mohatarem said.

Oil prices rose Wednesday with the expectation Tropical Storm Gustav could limit oil production along the gulf coast.

With several unknowns, most automakers have shied away from establishing expectations for vehicle sales.

Mohatarem offered two scenarios depending on where oil prices settle. GM expects that if oil prices stabilize at $130 a barrel, U.S. light-vehicle sales for 2009 could come in at 14.5 million. If oil prices stabilize at $100, sales could reach 15.5 million.

The Associated Press contributed to this report.

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