Oil falls to 3-year lows gasoline less than US$2 a gallon in nearly half the US

Source: Agencies  |   2008-11-21  |     ONLINE EDITION

CRUDE oil futures yesterday hit levels not seen in more than three years on dour economic reports suggesting a painful economic pullback in the United States.

Benchmark crude fell as low as US$48.50 a barrel on the New York Mercantile Exchange, levels last seen on May 18, 2005, when oil hit US$46.80 a barrel.

Light, sweet crude for December delivery fell 7 percent, or US$4, to settle at US$49.62 in Nymex trading.

Oil prices have fallen 66 percent since reaching a record US$147.27 a barrel in mid-July.

Oil analyst Stephen Schork wondered if US$50 would even hold.

"Maybe US$50 is too conservative given the putrid, putrid look at the economy," he said. "If we're not out of these doldrums nine months from now we're looking at US$30 oil."

Schork said he expects buyers of that December contract to put the oil into storage and that inventories will continue to build.

In London, Brent crude fell US$3.64 to settle at US$48.08 on the ICE Futures exchange.

Meanwhile, gasoline prices at the pump fell again overnight nationally close to US$2 a gallon (53 cents a liter), with the average price in 23 states even less than that.

Gasoline prices have been halved since reaching a record above US$4 in July, but relief from record crude prices have come amid a global economic meltdown.

New claims for unemployment benefits jumped last week to a 16-year high and US stock markets hit multiyear lows.

"Until we get past this malaise and gloom and doom, no one wants to step up and buy this market," said Mike Zarembski, senior commodity analyst at OptionsXpress.

The government said yesterday that new applications for jobless benefits exceeded estimates of Wall Street economists, rising to a seasonally adjusted 542,000 from a downwardly revised figure of 515,000 in the previous week. A survey of economists by Thomson Reuters expected 505,000.