Oil drops below $75 a barrel as gas pump prices fall further
— -- Oil prices closed below $75 a barrel for the first time in nearly 14 months Wednesday and the average retail price for gasoline fell nearly 4 cents overnight to a new national average of $3.125.
Light, sweet crude for November delivery fell $4.09, or 5.2%, to settle at $74.54 a barrel on the New York Mercantile Exchange. It was crude's lowest settlement prices since Aug. 31, 2007.
The drop came as OPEC reduced its 2009 petroleum demand forecast amid signs that the global economy is headed for a severe downturn.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill, said oil traders using the stock market as a barometer for economic health were "undoubtedly" pricing a recession into the market.
"It's just a question of severity," Ritterbusch said. "And given the downward movement in oil, it's beginning to look like a more severe recession than a lot of people had expected."
The Organization of the Petroleum Exporting Countries said rich nations in 2009 are expected to need only 400,000 barrels a day more oil than this year, whereas demand from developing countries will increase by an estimated 1.1 million barrels, with most of that growth coming from China, the Middle East and India.
OPEC's report comes about a month before the cartel is scheduled to hold a special meeting to discuss ways to deal with oil's slide, including the possibility of tightening output. OPEC controls 40% of the world's oil supply, though analysts say a cutback in OPEC production likely would not dramatically alter crude's downward direction.
Another bad day on Wall Street also pressured oil prices, which have tumbled a staggering 49% since soaring to an all-time high $147.27 on July 11. The Dow Jones industrial average plunged 733 points.
Crude's stunning collapse has sent gas pump prices tumbling. A gallon of regular gas fell nearly 4 cents overnight to a new national average of $3.125, according to auto club AAA, the Oil Price Information Service and Wright Express. That left prices nearly 10% lower from where they were only a week ago and almost 25% down from their all-time high of $4.114 set July 17.
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