Crude oil prices dipped to their lowest levels in more than a month on Friday, falling below US$89 a barrel as investors sold amid signs of weakening demand and expectations OPEC will boost production next week.
The slide in oil may mean consumers will see relief at the pump soon, analysts said. Gasoline and heating oil futures also dropped.
It was quite a turnaround for crude, which began the week pushing US$100 a barrel but ended it by falling to its lowest levels since Oct. 25.
PHOTO: AP
Light, sweet crude for January delivery fell US$2.30 to settle at US$88.71 a barrel on the New York Mercantile Exchange. Crude prices are more than US$10 below Monday's high of US$99.11 a barrel and the all-time high of US$99.29 a barrel set last week. Prices continued falling on Friday after the Nymex closed, dropping as low as US$88.45 in electronic trading.
Oil's downturn is good news for consumers, who will likely see lower gas prices in coming days, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service.
"We're looking at [gas prices] backing off quite a bit," he said.
Overnight, gas slid US$0.08 to a national average of US$3.088 a gallon, according to AAA and the Oil Price Information Service. Gas prices have been flat the past two weeks after rising steadily for a month as oil approached US$100 a barrel.
Gas prices could fall back to mid-October levels, when they averaged about US$2.76 a gallon, Kloza said. Despite the downturn, many observers predict gas will rise steeply in the spring, and could threaten the record price of US$3.227 a gallon set in May. That's because analysts expect next year's price to be driven by rising demand and tight supplies; last year's records came as a string of unexpected refinery outages cut gasoline output.
Oil has been pressured in recent days by evidence that OPEC members are raising their output, and by expectations that they will agree at a meeting this week to raise production further. Tepid domestic demand has also taken prices lower.
US demand for oil fell 0.8 percent in September compared to a year ago and is at its lowest level since April last year, Addison Armstrong, an analyst at TFS Energy Futures LLC in Stamford, Connecticut, said in a research note.
Meanwhile, recent data from English tanker-tracking firm Oil Movements shows OPEC output is already rising even as analysts expect further production hikes.
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