HOUSTON - Crude-oil prices tumbled yesterday after a raft of bad economic news and a report on growing stockpiles of unused gasoline that suggested demand for energy has continued to erode.
Light, sweet crude for February delivery fell $3.63 to settle at $35.35 in a shortened day of trading. It was the ninth straight session that crude has fallen.
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. But even with that decline, 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 & Associates. "Things are going to remain under downside pressure through the balance of this year and probably into the new year."
Not only are motorists cutting back, but manufacturers are slashing energy use as well. The reason was reflected in one of yesterday's economic reports: The government said orders at U.S. factories for big-ticket manufactured goods fell again in November.
For the week ended Dec. 19, inventories of crude oil fell 3.1 million barrels, or 1 percent, to 318.2 million barrels. But that is 9.1 percent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.
Gasoline inventories rose 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 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.
At the pump, retail gasoline prices fell less than a penny overnight to a new national average of $1.655 a gallon yesterday, and remain well below the year-ago average of $2.972 a gallon, according to AAA and the Oil Price Information Service.
In Philadelphia and the four surrounding counties in Pennsylvania, yesterday's average gasoline price was $1.74 a gallon, unchanged from Tuesday, according to AAA Mid-Atlantic. In the three suburban South Jersey counties, yesterday's average was down one cent to $1.51 a gallon. In the last month, the average in the Pennsylvania counties is down 35 cents a gallon; the decline in South Jersey is 27 cents.
Oil traders so far have brushed off attempts by OPEC to boost prices through production cuts. The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global supply, said last week it would slash production 2.2 million barrels a day, its largest single cutback ever. The most recent round of cuts would reduce OPEC production more than 2 million barrels a day.