Oil tumbles below $34

Rising inventories and faltering demand drive crude down to its lowest level in nearly two months.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Ben Rooney, CNNMoney.com staff writer

Click the chart for current energy prices.

NEW YORK (CNNMoney.com) -- Oil prices fell to a seven-week low Thursday as investors remain concerned about weak energy demand and swelling U.S. crude supplies.

Light, sweet crude for March delivery fell $1.96, or 5%, to settle at $33.98 a barrel. It was the lowest closing price since Dec. 19, when oil ended at $33.87 a barrel.

Crude prices fell more than 4% Wednesday after the International Energy Agency said it expects demand for crude to fall 84.7 million barrels per day in 2009. That's a decrease of 570,000 barrels per day, compared to January estimates.

Demand for oil and gasoline has evaporated as a deep recession cripples the global economy. Oil prices have tumbled nearly 19% so far this year, and have shed more than $110 since peaking at $147 a barrel last year.

As consumption tapers off, the amount of oil in storage has ballooned.

A weekly report from the Energy Department showed Wednesday that U.S. oil inventories grew a larger-than-expected 4.7 million barrels in the week ended Feb. 6. Crude stocks are now at their highest levels in more than 15 years, according to analysts at research firm Cameron Hanover.

"Those high inventories will keep oil prices on a downward path," said Tom Pawlicki, an energy analyst at MF Global Research in Chicago, in a research note. Over the next week, prices could fall to the "low $30's," he added.

At the same time, a raft of mixed economic data released Thursday highlighted the challenges facing the economy -- adding to the bleak outlook for demand.

A report from the National Association of Realtors showed that home prices fell 12.4% in the fourth quarter of 2008.

The Commerce Department said business inventories fell 1.3% in December, as sales remained weak.

Separately, the Labor Department said the number of Americans filing for first-time unemployment benefits claims fell by 8,000 to 623,000 in the week ended Feb. 7. Jobless claims remained, however, near a 26-year high.

Another government report showed retail sales unexpectedly rose in January. Total retail sales jumped 1% last month after six consecutive months of declines. Economists had forecast a decline of 0.8%.

The flurry of data comes as Congress works to finalize a $789 billion economic stimulus package. President Obama could sign the bill into law as soon as next week.

In addition to stimulus, the market is awaiting further information on the Obama administration's plan to deploy the second half of the $700 billion allocated under the Troubled Asset Relief Program.

Treasury Secretary Tim Geithner outlined the administration's priorities for the TARP funds Tuesday, but investors were disappointed by the lack of details.

Wall Street was not convinced by the government's efforts to jolt the economy out of the recession it has been stuck in for more than a year. Stocks were down nearly 2% with two hours left in the session Thursday as shares of financial institutions plummeted.

Gasoline prices, which have been climbing steadily in recent weeks, rose another 1.2 cents overnight.

The national average price for a gallon of regular gasoline now stands at $1.952, according to motorist group AAA, up nearly 21% so far this year. Still, gas prices are down more than $2 from last year's record high price of $4.114. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.