Nov. 20 (Bloomberg) — Crude oil tumbled to the lowest since May 2005 as a recession in the U.S., Europe and Japan cut global energy consumption.
Oil has dropped nearly $100 from its July record as the world economic crisis reduced global demand growth to its weakest in 23 years. Crude oil’s continuing slide will add to concern that the U.S. economy faces deflation, threatening investment in oil and gas production projects.
“The drop in oil prices is all about one thing, the decline in the global economy,†said Adam Sieminski, Deutsche Bank’s chief energy economist, in Washington. “At $50 a barrel, oil is starting to look very cheap on a number of historical price and income measures.â€
Crude oil for December delivery fell $4, or 7.5 percent, to $49.62 a barrel at 2:46 p.m. on the New York Mercantile Exchange, the lowest settlement since May 23, 2005. Prices fell as low as $48.64 today. Futures have dropped 66 percent since reaching a record $147.27 on July 11.
The December contract expired today. The more active January contract dropped $4.68, or 8.7 percent, to settle at $49.42 a barrel. It fell as low as $49.24 today.
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