The stunning collapse in oil markets accelerated Friday, with a barrel plunging below $78 as investors grow more pessimistic about a mushrooming global economic crisis.

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NEW YORK — The stunning collapse in oil markets accelerated Friday, with a barrel plunging below $78 as investors grow more pessimistic about a mushrooming global economic crisis.

A barrel of oil hasn’t been this cheap in 13 months — a rare silver lining for consumers amid a rapidly imploding financial landscape.

Crude’s steep losses came as Wall Street headed for its worst weekly drop ever. The Dow Jones industrial average fell as much as 700 points earlier in the day but swung in and out of positive territory as investors grappled with whether the market has finally hit a bottom.

“There’s so much fear out there and that’s really gripping the oil market. People are just afraid to hold a position, so they’re closing out and selling off,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

Light, sweet crude for November delivery fell $8.89 to settle at $77.70 a barrel on the New York Mercantile Exchange. It was the lowest settlement price for a front-month crude contract since Sept. 10, 2007.

Crude has now lost 47 percent of its value since hitting a record $147.27 on July 11 as a deepening credit crisis sparked by the subprime mortgage fiasco wreaks havoc around the globe and drives down energy demand.

The International Energy Agency (IEA) on Friday cut its global oil demand forecasts for this year and 2009, pointing to the worsening economic conditions and the tight credit supply.

The Paris-based energy watchdog cut its forecast for oil demand this year by 240,000 barrels per day, and slashed its 2009 forecast by 440,000 barrels per day. The IEA now expects global oil demand to total 86.5 million barrels per day this year and 87.2 million barrels per day next year.

“The fundamental game for oil has changed. In the last decade, oil went up because of strong global economic growth. That story for the near term is over, so everybody has to re-evaluate,” said Phil Flynn, energy analyst at Alaron Trading in Chicago.