Oil falls below $50 a barrel; natural gas reserves climb

Associated Press

November 21, 2008

Oil prices hit levels not seen in more than three years yesterday and retail gasoline prices are now below $2 across nearly half of the country on economic reports suggesting a painful economic pullback.

Benchmark crude fell as low as $48.50 a barrel on the New York Mercantile Exchange, levels last seen May 18, 2005, when oil hit $46.80 a barrel.

Meanwhile, prices at the pump fell again overnight nationally close to $2 a gallon.

"After this summer, this is wonderful ... wonderful," said Anuj Dayal, a cabdriver in New York's Hell's Kitchen neighborhood. "I hope gas is $1 soon. I hope it's free."

Gasoline prices have been halved since rising above $4 in July, but relief from record crude prices has come amid a global economic meltdown.

Light sweet crude for December delivery fell 7 percent, or $4, to settle at $49.62 in NYMEX trading. Oil prices have fallen 66 percent since reaching a record $147.27 a barrel in mid-July.

Oil analyst Stephen Schork wondered if $50 would even hold.

"Maybe $50 is too conservative given the putrid, putrid look at the economy," he said. "If we're not out of these doldrums nine months from now we're looking at $30 oil."

The Energy Department's Energy Information Administration also reported yesterday that natural gas storage levels far exceeded expectations, driving prices 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 that ended Nov. 14. Analysts had expected little to no change in reserve levels.