NEW YORK (AP) -- Oil plunged below $52 a barrel Thursday to its lowest price since May extending a sharp decline that has been led by dampened heating oil demand, but which could save consumers money on a more widely used fuel: gasoline.Crude oil has tumbled by 15 percent so far this year in a huge sell- off that was kicked off by investment funds last year, and then stoked by a historically warm U.S. winter that has left supplies of heating fuel barely touched.
On Thursday, trading was choppy, with crude declining in pre-market electronic trading, rising to nearly $55 a barrel in morning trading, and then plummeting to settle below $52. Factors that could cause oil to rise again are the possibility of escalating tension in the Middle East, growing global energy demand, violence in Nigeria and production cuts by OPEC.
Light, sweet crude for February delivery dropped $2.14 to settle at $51.88 on the New York Mercantile Exchange, after dropping as low as $51.80. It was the lowest settlement price since May 27, 2005 when the front-month crude contract closed at $51.85.
The National Oceanic and Atmospheric Administration said Thursday that it expects warmer-than-normal weather in the Northern United States to continue through March. This winter has caused a glut in petroleum products; on Wednesday, U.S. government data showed big increases in domestic gasoline and heating oil inventories.
Adding to the price slide Thursday was the resumption of oil shipments through Belarus to other parts of Europe, and the belief that the Organization of Petroleum Exporting Countries won't announce another production cut just yet to stall the market's drop. Many traders suspect that OPEC isn't even complying with the cuts they've already announced.