Oil under $44 as global economy falters
Crude drops as European rate cuts emphasize economic weakness and a decline in world energy demand.
NEW YORK (CNNMoney.com) -- Oil prices fell to nearly a 4-year low Thursday, dipping below the $44-a-barrel mark, as concern about the economies of Europe and the United States continued to weigh on energy demand.
U.S. crude for January delivery fell $3.12 to settle at $43.67 a barrel on the New York Mercantile Exchange. It was the lowest closing price since Jan. 5, 2005 when oil settled at $43.39 a barrel.
Prices have fallen more than $100 a barrel from $147.27 in mid-July, as the worldwide economy has driven down demand for petroleum-based fuel.
Crude hit a low of $43.51 during trading, a level not seen since Jan. 6, 2005, when crude hit an intraday low of $42.80 a barrel.
In Europe, the Bank of England and the European Central Bank attempted to bolster their economies Thursday, announcing large interest rate cuts. The Bank of England cut rates to 2%, the lowest level since 1951, while the ECB cut rates to 2.5% in attempt to keep cash flowing through their systems.
"The rate cut was expected," said Mark Waggoner, president of Excel Futures in California. "There really has been no bullish news coming out about oil."
"Who wants to go in and buy crude oil when the price keeps going down and down and down," he added.
The Swedish central bank also cut rates by a record 1.75 percentage points to 2%, and in France, President Nicolas Sarkozy announced plans for a $33 billion stimulus package.
U.S. economy: In the United States, the world's largest oil consumer, retailers reported steep declines in November sales.
About half of 35 top retailers tracked by Thomson Reuters missed same-store sales estimates in November. The "same-store sale" measurement tracks sales at stores open at least a year, and are used by analysts to assess the core health of a retailer. The month's overall same-store decline was the worst on record since Thomson-Reuters started tracking estimates in 2000.
Auto executives also drove to Washington to pressure Congress for $34 billion in loans to stay afloat.
Should one of the big U.S. automakers fail, "we then probably go into a longer recession," said Waggoner.
A failure at one or more auto company could also stress already sour unemployment figures.
The number of new unemployment claims filed in the U.S. fell in the week ended Nov. 29, according to the government, but remained more than 500,000 indicative of a weak economy.
Job losses in the United States, the world's largest oil consumer, are expected to hit 325,000 in November when the Labor Department releases its monthly report on Friday, according to economists. The unemployment rate could also rise to 6.8% for the month, the most since February 1993.
Another government report showed that new factory orders fell for the third straight month in October, in a much larger drop than economists had expected.
Demand: The plummeting price of crude oil has sent the price of gasoline in the U.S. into a tailspin, as consumers and businesses cut back on expenses.
Gas prices declined for the 78th day in a row Thursday to a national average of $1.789 a gallon, according to motorist group AAA. However, lower gas prices may spur Americans to start consuming again, and crude prices may be hard pressed to fall below $40 a barrel, according to Waggoner.