Oil price nears $35

 2 comment(s)  
 E-mail Story
 Print Story
  Share

 digg it!
 Facebook
 del.icio.us
Seed Newsvine
Fark It
Reddit

Text Size: 

Tools Sponsor

By The Associated Press

Crude prices tumbled again Wednesday following a raft of economic news that painted an ugly picture of the nation’s economy, suggesting demand for energy will continue to erode.

Light, sweet crude for February delivery fell $3.63 to settle at $35.35 in a shortened day of trading. Prices fell as low as $35.13 just before the market closed for the holiday.

Investors expecting more evidence of slowing U.S. energy demand got a bit of a surprise as the Energy Department reported crude inventories dropped last week.

[+]Enlarge

But Americans continue to cut back on driving amid the worst recession in a generation, leading to growing stockpiles of gasoline and eroding demand for motor fuel.

Gasoline futures plummeted below 80 cents a gallon.

“I don’t see anything out of this report that’s really going to change this downward move,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. “Things are going to remain under downside pressure through the balance of this year and probably into the new year.”

A steady stream of dismal U.S. economic and corporate data during the past few months has hammered investor confidence and sent oil prices reeling 74 percent since July.

For the week ended Dec. 19 crude inventories fell by 3.1 million barrels, or 1 percent, to 318.2 million barrels, which is 9.1 percent above year-ago levels, the Energy Department’s Energy Information Administration said in its weekly report.

Gasoline inventories rose by 3.3 million barrels, or 1.6 percent, to 207.3 million barrels, which is 2.4 percent below year-ago levels. Analysts expected stockpiles of the motor fuel to rise by 900,000 barrels.

Demand for gasoline over the four weeks ended Dec. 19 was 2.7 percent lower than a year earlier, averaging nearly 9 million barrels a day.