Oil prices hit lowest level in 7 weeks

Crude oil futures tumbled below $48 a barrel yesterday, closing at their lowest level in seven weeks, on rising expectations that the US supply of transport and home-heating fuels will be adequate this winter.

Light crude for December delivery dropped $1.72, or 3.5 percent, to settle at $47.37 per barrel on the New York Mercantile Exchange as traders awaited the US government's upcoming petroleum supply report. It was the cheapest closing price since Sept. 21, when Nymex oil finished at $47.10 per barrel.

While oil prices are down roughly 14 percent from the Nymex settlement high of $55.17 late last month, relief at the retail level might not come soon enough for consumers, according to the Energy Department, which yesterday raised its estimate for home heating costs over the next five months.

An important set of evidence will be revealed to the market today, when the Energy Department releases its weekly petroleum supply data.

Traders appeared to be betting that the data will show rises in domestic inventories of crude oil and distillate fuel, which includes heating oil, diesel and jet fuel.

James Cordier, head trader at Liberty Trading Group Inc. of Tampa, Fla., said the supply report -- and the market's reaction to it -- could "decide energy prices for the rest of the year."

The average retail price of heating oil was $2.06 per gallon nationwide last week, compared with $1.38 a gallon a year earlier.