Oil prices fell below $90 a barrel Monday for the first time since February because of the economic slowdown, even though production in...
Oil prices fell below $90 a barrel Monday for the first time since February because of the economic slowdown, even though production in the Gulf of Mexico hasn’t fully recovered from hurricane destruction three weeks ago.
Light, sweet crude for November delivery fell $6.07, or 6.4 percent, to $87.81 on the New York Mercantile Exchange. It was crude’s fourth straight negative session.
The price decline of recent weeks, from a record high for crude oil of $147.27 a barrel during the trading day on July 11, has been breathtaking for energy analysts and traders, some of whom had predicted during the summer that the price would cross the $200 threshold by 2010 or sooner.
Now, amid weakening global demand, prognosticators are talking about prices going down to $70 or lower.
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“The buying frenzy that engulfed the oil market in the beginning of the year is about to go into reverse,” said Phil Flynn, an analyst at Alaron Trading, in a note to investors Monday, “and the myths that oil bulls tried to feed us are coming apart at the seams.”
Economic worries are overshadowing any relief consumers might feel at the gas pump, where the average national price for a gallon of regular unleaded dropped 2 cents from Sunday, to $3.50, according to AAA.
That is still a high price by historical standards but down 15 cents from a month ago, and well below the record peak of $4.11 a gallon on July 17.
Gasoline prices are bound to go lower, experts say, as oil prices fall.
What makes the sudden drop in prices all the more surprising is that it comes at a time when industry executives are realizing that damage to oil platforms and underwater pipelines from Hurricane Ike is more serious than originally thought.
The federal Minerals Management Service reported Monday that 46.2 percent of oil production and 40.6 percent of natural-gas production were still shut down.
Most platforms were closed for safety reasons before Hurricane Gustav entered the Gulf in late August then remained shut as the more powerful Ike struck last month.
Material from The New York Times and The Associated Press was used in this report.