Oil settles below $50
Crude prices end lower as the all three major indices fall and a monthly report from the EIA says demand is significantly below last year.
NEW YORK (CNNMoney.com) -- Oil settled below $50 a barrel Tuesday as the selloff on Wall Street picked up steam and investors weighed a glut in supply.
Crude for May delivery ended the session 64 cents lower at $49.41. Earlier in the session, oil dipped as low as $48.85 a barrel and rallied as high as $51.12.
A report from the Commerce Department released Tuesday showed that retail sales fell 1.1% in March, compared with February's revised gain of 0.3%. Economists had been looking for a 0.3% increase.
The surprise decline renewed concerns about a recession - and with it weakening demand for oil. The Dow was down almost 150 points midway through the afternoon session.
The EIA, in its monthly short-term energy outlook released Tuesday, said global demand in 2009 is expected to decline by 1.35 million barrels per day from the prior year. The EIA said it expects west Texas intermediate crude to be $53 a barrel in 2009, down from $100 last year. In 2010, EIA expects oil to average $63 per barrel.
The oil market also braced for Wednesday's weekly supply report from the U.S. Energy Information Administration. Analysts surveyed by Platts, the energy research firm, expect crude oil stockpiles increased by 2.5 million barrels last week.
"As the May contract comes closer to expiration, the market is finding it harder to ignore the glut of supply that is very possibly ready for delivery," said Phil Flynn, senior market analyst at Alaron Trading, in a daily research note. "This is a reality the market will eventually have to face - despite the fact that the price of oil is being more influenced by the dollar and the stock market."
The May contract expires on April 22.
Retail gas prices dipped Tuesday, according to a daily survey of credit card swipes by motorist group AAA. The national average for a gallon of regular gas dipped one tenth of one percent to $2.050 from $2.051 the day prior. The average price of a gallon of gas is down $2.064 or 50% from the record high price of $4.114 that AAA reported on July 17, 2008.