Oil prices coughed up all of their 2008 gains and then some Thursday, stopping only after crashing below the $70-a-barrel barrier, a level not seen since the summer of 2007.
The betting money is that oil still has much further to fall, perhaps as low as $50 a barrel before the end of the year.
Economists say that would give beleaguered U.S. consumers the rough equivalent of a new economic stimulus package, dragging retail gasoline prices back down as low as $2.20 a gallon nationally. Natural gas and heating oil prices also are cratering, which would help with winter heating bills.
One possible hitch comes from OPEC, which Thursday called for an emergency meeting next week to discuss whether to cut production. Ministers from the Organization of the Petroleum Exporting Countries, which pumps more than 40% of the world's oil, had planned to meet after the U.S. election but now will gather in Vienna on Oct. 24.
"OPEC will try to get prices to stabilize around $70, but $70 oil is still not cheap with global economies slowing and demand running this low," said Fadel Gheit, senior energy analyst for Oppenheimer & Co.
In New York futures trading, the U.S. benchmark grade of oil fell to $68.57 a barrel before closing at $69.85, down $4.69. It was the lowest settlement price since Aug. 23, 2007.
Oil has declined more than 50% from the record high in July above $147, largely on fears that slumping world economies would further damp use of oil and its products.
Traders said the market reacted negatively to an Energy Department report Thursday that U.S. oil and gasoline stockpiles were sharply higher than expected and gasoline demand was down 5.2%. Phil Flynn, senior market analyst for Alaron Trading Co., said traders were still trying to catch their breath by the end of the day.
"Now you know why some of us drink heavily," Flynn quipped, noting that he had begun the day thinking that oil could drop to $67 a barrel but ended it believing that $50 was possible by year's end.
Pump prices continued to plunge. The average price for a gallon of self-serve regular Thursday was $3.084 nationwide, down 4.1 cents from Wednesday, according to AAA. In California, the average fell 2.2 cents to $3.42. Analysts predicted the U.S. average could drop to $2.20 to $2.50 a gallon nationally and $2.70 to $3 in California by New Year's Day.
