(RTTNews) - Oil prices tumble again on Monday morning as economic concerns continued to outweigh OPEC's production cut. Light sweet crude for December delivery fell to $62.88, down $1.25 on the session. Crude dipped as low as $61.30 in overnight trading, its lowest level since May 2007.
Crude has been trending sharply lower for more than a month and has lost more than 40% from its highest levels from September. On a longer-term basis, oil is down about 57% from its record high of $147.27 reached in July.
In an effort to tackle the drop in the demand for oil in the face of the slowing global economy, the Organization of Petroleum Exporting Countries announced last week will cut oil production by 1.5 million barrels per day, effective November 1. Traders shook off that news as crude lost $3.69 on Friday and $7 last week.
Prices at the pump continued to drop and have moved well-below last year's levels. According to AAA's daily fuel gauge, the average price of a regular unleaded gallon of gasoline was $2.668, down 3 cents from the day before. This is sharply below the month-ago level of $3.667 and also lower than the year-ago mark of $2.849. Gasoline prices reached a record $4.114 on July 17.
The dollar and yen continued to appreciate Monday morning in New York as traders flocked once more to the relative safety of lower-yielding currencies amid global financial turmoil.
The Federal Reserve will open its Commercial Paper Funding Facility today. The Fed is scheduled to announce its latest decision on interest rates on Wednesday. The Fed is widely expected to lower interest rates once again.
Oil traders also looked ahead to the Energy Information Administration's weekly inventory report, which is due on Wednesday. Last week's data showed crude oil inventories increased by 3.2 million barrels in the week ended Oct. 17. Total motor gasoline inventories increased by 2.7 million barrels.
Data showed showed demand also has continued to decline. Over the last four weeks, motor gasoline demand has averaged 8.8 million barrels per day, down by 4.3 percent from the same period last year. Distillate fuel demand has averaged about 3.9 million barrels per day over the last four weeks, down by 5.8 percent from the same period last year. Jet fuel demand is 9.2 percent lower over the last four weeks compared to the same four-week period last year.
by RTT Staff Writer
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