Oil at 3-year lows; gas below $2 in 23 states
COLUMBUS, Ohio — Oil prices today hit levels not seen in more than three years and retail gasoline prices are now below $2 across nearly half of the country on dour economic reports suggesting a painful economic pullback.
Benchmark crude fell as low as $49.75 a barrel on the New York Mercantile Exchange, levels last seen on May 18, 2005, when oil hit $46.80 a barrel.
Meanwhile, prices at the pump fell again overnight nationally close to $2 a gallon, with the average price in 23 even less than that.
Gasoline prices have been halved since reaching a record above $4 in July.
Oil prices fell as new claims for unemployment benefits jumped last week to a 16-year high and U.S. 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 Thursday 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.
That is the highest level of claims since July 1992 when the U.S. economy was coming out of a recession, according the Labor Department.
The four-week average of claims, which smooths out fluctuations, was even worse: it rose to 506,500, the highest in more than 25 years.
In addition, the number of people continuing to claim unemployment insurance rose sharply for the third straight week to more than 4 million, the highest since December 1982, when the economy was in a painful recession.
Light, sweet crude for December delivery fell 5 percent, or $2.76, to $50.86 in midday Nymex trading.
The Energy Department's Energy Information Administration also reported Thursday that natural gas storage levels far exceeded expectations, driving prices sharply downward.
Natural gas inventories held in underground storage in the lower 48 states rose by 16 billion cubic feet to about 3.45 trillion cubic feet for the week ended Nov. 14.
Analysts had expected little to no change in reserve levels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Gas prices fell 2.7 cents overnight to $2.02 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express.
The average price for gasoline is on pace to fall below $2 nationally by the end of the week.
In other Nymex trading, gasoline futures fell 5 cents to $1.0568 a gallon. Heating oil lost 4.26 cents to $1.717 a gallon while natural gas for December delivery slid 38.8 cents to $6.35.5 per 1,000 cubic feet.