Oil price falls below US$60
The price of oil fell below US$60 for the first time since July 2009 on Thursday and ended trading in New York at US$59.95.
Benchmark US crude oil dropped 99 cents, or 1.6 per cent. Oil has fallen steadily for nearly six months, and is down 44 percent since reaching a high for the year of US$107.26 in late June.
"We don't see a price bottom," wrote energy analyst Jim Ritterbusch in a note to investors. He expects oil to fall further, toward US$55 a barrel, in the short term.
The drop is a result of rising global oil production, especially in the US, at a time when demand has weakened because of slowing economies in Asia and Europe.
OPEC said this week that higher production from non-OPEC members and global economic growth will reduce demand for its oil to 28.9 million barrels a day next year. That's the lowest level in more than a decade, and far less than the 30 million barrels per day that the group says it plans to produce next year.
The price collapse has pushed down prices for gasoline, diesel and other fuels, lowering expenses for drivers, shippers and airlines and giving a boost to consumer-driven economies like that of the US.
The average price of gasoline in the US fell to US$2.61 a gallon Thursday, according to AAA. That's 64 cents below last year at this time, saving US drivers US$7 billion a month. The US Energy Department predicted this week that lower gasoline prices next year will save a typical US household US$550 over the course of the year.
Lower crude prices have sent the share prices of oil companies and drilling services companies spiralling lower, though, and caused many to cut back drilling projects.
As a result, the Energy Department this week trimmed its forecast for oil production growth in the US for next year, though it still expects a sizable increase. BP announced a US$1 billion restructuring plan this week that analysts said could result in the elimination of thousands of jobs.
The lower prices are also pressuring government budgets in oil-producing US states and cash-hungry oil exporters such as Iraq, Iran, Russia and Venezuela.