Crude oil prices dropped to lowest levels in more than a month Friday, falling below $89 a barrel.
The slide in oil may mean consumers will see relief at the pump soon, analysts said. Gasoline and heating oil futures also dropped.
It was quite a turnaround for crude, which began the week pushing $100 a barrel but ended it by falling to its lowest levels since Oct. 25.
Light, sweet crude for January delivery fell $2.30 to settle at $88.71 a barrel on the New York Mercantile Exchange. Crude prices are more than $10 below Monday's high of $99.11 a barrel and the all-time high of $99.29 a barrel set last week. Prices continued falling Friday after the Nymex closed, dropping as low as $88.45 in electronic trading.
Oil's downturn is good news for consumers, who will likely see lower gas prices in coming days, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service.
"We're looking at (gas prices) backing off quite a bit," he said.
Overnight, gas slid 0.8 cent to a national average of $3.088 a gallon, according to AAA and the Oil Price Information Service. Gas prices have been flat the past two weeks after rising steadily for a month as oil approached $100 a barrel.
Gas prices could fall back to mid-October levels, when they averaged about $2.76 a gallon, Kloza said. Despite the downturn, many observers predict gas will rise steeply in the spring, and could threaten the record price of $3.227 a gallon set in May. That's because analysts expect next year's price to be driven by rising demand and tight supplies; last year's records came as a string of unexpected refinery outages cut gasoline output.
Oil has been pressured in recent days by evidence that Organization of Petroleum Exporting Countries are raising their output, and by expectations that OPEC members will agree at a meeting next week to raise production further. Tepid domestic demand has also taken prices lower.
U.S. demand for oil fell 0.8 percent in September compared to a year ago and is at its lowest level since April 2006, Addison Armstrong, an analyst at TFS Energy Futures LLC in Stamford, Conn., said in a research note.
Meanwhile, recent data from English tanker-tracking firm Oil Movements shows OPEC output is already rising even as analysts expect further production hikes.
"Slowing demand and possible oil production increases by OPEC have combined to ease the upward pressure on oil prices," Armstrong said.
Oil investors quickly looked past Thursday's fire at an Enbridge Energy Partners LP pipeline in northern Minnesota. Three of the pipeline's four conduits were returned to service Thursday, and the fire-damaged line, which was already closed for maintenance at the time of the accident, was expected to be back up within days. The four pipelines together normally carry about 16 percent of U.S. crude imports.
Other petroleum futures were also down Friday. December gasoline futures fell 0.57 cent to settle at $2.2591 a gallon on the Nymex, while December heating oil futures fell 4.75 cents to settle at $2.5296 a gallon. Both contracts expired at the close of trading Friday.
January natural gas futures fell 15 cents to settle at $7.302 per 1,000 cubic feet on the Nymex.
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