Oil drops 9% to less than $50 per barrel
US recession, falling demand prompt slide
COLUMBUS, Ohio - Oil prices tumbled below $50 a barrel yesterday as the National Bureau of Economic Research reported the US economy has been in a recession since December 2007 and the Dow Jones industrial average fell nearly 700 points.
A tandem of bleak economic reports led to an early decline even before the recession report was released, and a huge sell-off on Wall Street was enough to send crude prices down fast on the belief that energy demand is deteriorating.
Light, sweet crude for January delivery fell more than 9 percent, or $5.15, to settle at $49.28 a barrel on the New York Mercantile Exchange.
Crude has lost nearly 70 percent of its market value since July when it peaked near $150 per barrel.
Analyst Phil Flynn with Alaron Trading Corp. said the $50 price remains significant psychologically for traders.
"It opens up the possibility of further declines," he said.
In a note to investors yesterday, Raymond James Equity Research slashed its 2009 oil price forecast from $90 per barrel to $60 per barrel.
In London, January Brent crude fell more than 10 percent, or $5.52, to settle at $47.97 on the ICE Futures exchange.
Dour economic news in the United States comes on the heels of a meeting over the weekend in Cairo where OPEC said it would not cut production before it meets in three weeks.
Meanwhile, prices at the pump continued to fall, but at a slower rate. The price fell half a cent overnight to $1.82 per gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. That is 64.3 cents lower than a month ago and $1.25 lower than a year ago.
Gasoline prices in Massachusetts fell to $1.85 per gallon in AAA Southern New England's weekly survey, 7 cents lower than a week ago.
The average price for self-serve, regular unleaded gas was $1.18 less than the $3.02 Massachusetts average at the close of Thanksgiving weekend 2007, the auto club said, adding that the last time Massachusetts prices dropped this low was in January 2005, when the average fell to $1.82. 