COLUMBUS, Ohio (AP) — Crude tumbled Friday and the price for a gallon of gasoline fell below year-ago levels for the first time in 2008, even as OPEC announced a huge production cut in an attempt to halt the declines.
Crude prices have now fallen 56 percent from the highs reached in July, and more than $41 per barrel in just the last 30 days.
OPEC said at an emergency meeting Friday that it will slash oil production by 1.5 million barrels to stem the "dramatic collapse" of oil prices, but crude prices plunged 5 percent anyway as financial markets spiraled downward across the globe.
But investors focused instead on a downward market spiral that began in Asia, then spread to Europe and the United States.
Light, sweet crude for December delivery fell $3.24 to $64.60 a barrel on the New York Mercantile Exchange. Prices had fallen as low as $62.85 earlier in the day.
The failure of a big production cut by the Organization of Petroleum Exporting Countries to stem the slide in crude prices only cemented sentiments on the oil market.
"All OPEC confirmed for the market is how weak demand is," oil trader and analyst Stephen Schork said.
Supporting that view was a report released Friday by the U.S. Department of Transportation that showed the largest monthly decline in miles driven in 66 years.
Americans drove 5.6 percent less, or 15 billion fewer miles, in August 2008 compared with August 2007 — the biggest single monthly decline since the data was first collected regularly in 1942.
Americans have drastically altered driving habits, if they are driving at all, amid a severe economic downturn.
A Labor Department report released this month showed that the number of people who have become unemployed over the last year has risen by 2.2 million to 9.5 million.
From November through August, Americans drove 78.1 billion fewer miles than they did over the same 10-month period a year earlier. The decline is most evident in rural interstate travel where travel is down more than 4 percent compared with a 2 percent decline in urban miles traveled, according to the agency.
The latest weekly report from the U.S. Department of Energy shows that demand has fallen in 38 of the past 42 weeks. U.S. demand is down nearly 10 percent during the past four weeks year on year. The U.S. still consumes one out of every four barrels of oil produced.
A gallon of regular gas fell another 4 cents overnight to a new national average of $2.78, according to auto club AAA, the Oil Price Information Service and Wright Express. That's nearly a dollar less than what was paid last month and 4 cents below a year ago and the first time this year there was a decline compared with 2007 prices.
Still, gas prices are off from their peak by about a third compared with the price of crude.
But gasoline prices are all but certain to fall further.
Oil that is being traded now will not be delivered until next month. That oil must be refined, or turned into gasoline, and then shipped to filling stations.
As for the oil being priced on markets today, oil traders are increasingly gauging future demand on dour financial markets.
Wall Street joined world stock markets in a sharp sell-off Friday, with the Dow Jones industrials dropping nearly 300 points in early trading and all the major indexes falling more than 4 percent.
Japan's Nikkei stock average fell a staggering 9.60 percent. In Europe, Germany's benchmark DAX index was down 7.1 percent, France's CAC40 dropped 5.7 percent while Britain's FTSE 100 sank 6.8 percent after the government said its gross domestic product fell 0.5 percent in the third quarter, putting the country on the brink of recession.
In other Nymex trading, heating oil futures fell 7.97 cents to $1.95 a gallon, while gasoline futures fell 9.2 cents to $1.48 a gallon. Natural gas for November delivery fell 14.6 cents to $6.27 per 1,000 cubic feet.
In London, November Brent crude was down $3.39 to $62.53 a barrel on the ICE Futures exchange.
