Oil settles below $50 again
Crude edges lower as investors remain focused on stock prices and demand weakness.
NEW YORK (CNNMoney.com) -- The price of oil fell Friday, settling at a 5 1/2 year low, as volatile stock prices raised concerns about waning global energy demand.
Light, sweet crude for January delivery fell 51 cents to close at $49.93 a barrel on the New York Mercantile Exchange. The decline brings oil to its lowest level since May 24, 2005 when it settled at $49.67 a barrel.
Friday's retreat comes on the same day that retail gasoline prices fell below $2 a gallon for the first time in more than 3 years. The average price for a gallon of regular gas stood at $1.989 nationwide, according to a survey by AAA.
At $49.93 a barrel, the price of oil is down 66% from the summer's peak price above $147 a barrel, and many analysts think it could fall further.
Oil's decline comes as demand for gasoline and other petroleum products has collapsed amid a global economic slowdown that has launched world stock markets into a tailspin.
"The same way no one had a clue how high prices could go last July, there is no telling how low we can go now," said Stephen Schork, an oil trader and publisher of the industry newsletter The Schork Report. "Do not trust anyone in this market who tries to convince you that oil cannot go below $40," he added.
At the same time, stock prices on Wall Street have plummeted. The Dow Jones industrial average is off 46% so far this year. And the Standard & Poor's 500 index fell to an 11 1/2 year low Thursday.
Crude prices and stock prices have been tightly correlated. Oil traders look to the stock market to assess the severity and duration of what many economists say is a looming global recession.
Stocks on Wall Street opened higher but struggled to hold gains as investors remained focused on the weak economy and the grim outlook for the nation's auto industry.