Oil edges higher, US gas prices dip below US$2 a gallon

Source: Agencies  |   2008-11-22  |     ONLINE EDITION

THE price for regular gasoline tumbled below US$2 a gallon (53 cents a liter) yesterday, its lowest point in more than three years, and crude oil futures edged higher in volatile trading.

On the New York Mercantile Exchange, where oil futures seemed destined to breach US$200 just a few months ago, pessimism was an understatement.

"At this point, all we can say with any degree of confidence is that crude oil ... will not trade below zero," trader and analyst Stephen Schork said yesterday in a tongue-in-cheek analysis of the market's swoon.

Crude has been in free-fall, shedding two-thirds of its value since July, and gasoline prices have followed. Some say oil could be headed below US$40 a barrel.

Light, sweet crude for January delivery rose 51 cents to settle at US$49.93 a barrel on the New York Mercantile Exchange. Earlier, in electronic trading, the price dipped to US$48.25, the lowest level since May 18, 2005.

In London, January Brent crude rose US$1.17 to settle at US$49.19 on the ICE Futures exchange.

Yesterday's activity reflected just how closely oil traders have gauged the mood in equities markets over the past several weeks.

Wall Street moved higher Friday, with investors taking a breather from the heavy selling of recent days. Energy and utility stocks showed some advances.

It was a different story earlier in the week.

The Dow plunged Thursday after the Labor Department said new applications for jobless benefits exceeded analyst estimates and rose to the highest level of claims since July 1992 and investors grew even more leery about the health of the nation's biggest banks.

Benchmark crude trailed Wall Street, falling as low as US$48.50 a barrel.

In a note to clients yesterday, Tudor Pickering Holt & Co. Securities said economic concerns are clearly trumping any further production cuts by the Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global supply.