NEW YORK — Oil prices that a few months ago looked like they just would keep on rising fell Thursday to a level less than half the record high of $147.27 they reached this summer. Crude dropped below $70 a barrel, reaching a 14-month low, after the government reported massive increases in U.S. crude and gasoline supplies.
Investors took the news as more evidence that a global credit crisis and a shaky economy are curbing demand.
At the pump, a gallon of regular gasoline shed another 4 cents overnight to a new national average of $3.084, according to auto club AAA, the Oil Price Information Service and Wright Express. At this rate, the national average for gasoline could fall below $3 by the weekend — a level not seen since Feb. 16.
"It's dropping like a rock," said Fred Rozell, retail pricing director at the Oil Price Information Service in Wall, N.J.
Startled by crude's rapid drop, OPEC on Thursday announced it was moving up by almost a month an emergency meeting to discuss whether or not a production cut is needed. The Organization of the Petroleum Exporting Countries will now meet Oct. 24 at its headquarters in Vienna, Austria, instead of Nov. 18.
Oil market traders ignored the statement, convinced that prices are headed lower.
Light, sweet crude for November delivery dropped $4.69, or 6.2 percent, to settle at $69.85 a barrel on the New York Mercantile Exchange, the lowest settlement prices since Aug. 23, 2007.
Suspecting that fears of a protracted recession were overblown, traders increaded the price of crude by $1.40 to $71.25 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon today in Singapore.
"I think the market has been way oversold,'' said Gavin Wendt, head of mining and resources research at consultancy Fat Prophets in Sydney today. "The sentiment has been dominated by fear and panic, and when people are scared, they just keep selling.''
The U.S. Energy Information Administration also says gasoline stock rose by 7 million barrels last week, more than double the build analysts had expected.
Demand for gasoline over the four weeks ended Oct. 10 was 5.2 percent lower than a year earlier, averaging nearly 8.8 million barrels a day, the agency said.
While U.S. energy supplies have been swelling because of falling demand, they've also grown as U.S. Gulf Coast energy installations continue to increase production after shutdowns caused by hurricanes Ike and Gustav. That has helped to further drive down prices, especially for gasoline.
But analysts doubt a production cut by OPEC, which investors view as increasingly likely, would do much to suspend oil's free fall. OPEC's decision last month to cut production by 520,000 barrels a day hardly made a dent in oil prices.
"I think the market has already priced in another 500,000 barrel production cut and it doesn't care," Flynn said.
In other trading, heating oil fell 10.32 cents to $2.0873 a gallon, while gasoline futures lost 16.02 cents to $1.622 a gallon. But natural gas futures advanced for the third time in four days after a government report showed a smaller-than-forecast gain in U.S. storage. Natural gas for November delivery rose 11.1 cents to $6.703 per million British thermal units.
