Recession announcement pushes oil below $50 a barrel

COLUMBUS, Ohio (AP) — Oil prices tumbled below $50 a barrel Monday as National Bureau of Economic Research reported that the U.S. economy has been in a recession since December 2007.

Light, sweet crude for January delivery fell more than 9 percent, or $5.15, to settle at $49.28 a barrel on the New York Mercantile Exchange.

Crude has lost nearly 70 percent its market value since July when it peaked near $150 per barrel.

Analyst Phil Flynn with Alaron Trading Corp. said the $50 price remains significant psychologically for traders.

“It opens up the possibility of further declines,” he said.

In a note to investors Monday, Raymond James Equity Research slashed its 2009 oil price forecast from $90 per barrel to $60 per barrel.

In London, January Brent crude fell more than 10 percent, or $5.52, to settle at $47.97 on the ICE Futures exchange.

Dour economic news in the U.S. comes on the heels of a meeting over the weekend in Cairo, Egypt, where OPEC said it would not cut production before it meets in three weeks.

On Saturday, Saudi Oil Minister Ali Naimi said that Organization of Petroleum Exporting Countries will do what needs to be done to shore up oil prices when the group meets Dec. 17 in Algeria.

There are continuing indications, however, that OPEC has lost much of its power to control prices by cutting supply.

A report on Iranian state TV Monday in which OPEC Secretary-General Abdullah El-Badri was quoted as saying that a daily oil production cut of between 1 million and 1.5 million barrels was likely in December did little to halt declines.

OPEC, which accounts for about 40 percent of global supply, cut output by 1.5 million barrels a day in October, bringing total cuts to around 2 million barrels a day this year.

Those measures have had no discernible effect on oil prices, which have fallen another 26 percent since the last round of production cuts on Oct. 24.

Meanwhile, prices at the pump continued to fall, but at a slower rate. The price fell half a cent overnight to $1.82 per gallon, according to auto club AAA.

, the Oil Price Information Service.

That is 64.3 cents lower than a month ago and $1.248 lower than a year ago.

Prices also have been falling in Europe though they remain much higher than in the U.S.

In Germany, Europe’s largest economy, a liter of gasoline sold for $1.47 per euro, or about $5.59 per gallon, according to TCS, the Swiss automobile club. That is down 26 percent from July 16.

Prices have fallen 24 percent since July 16 in France where gas sold for $1.40 per euro Monday.

In other Nymex trading, gasoline futures tumbled 9.8 cents to settle at $1.1112 a gallon. Heating oil dropped 11.2 cents to settle at $1.6151 a gallon. Natural gas for January delivery, however, rose 9.4 cents to settle at $6.604 per 1,000 cubic feet.

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Associated Press writers Pablo Gorondi in Budapest, Hungary, and Alex Kennedy in Singapore and Martin Crutsinger in Washington contributed to this report.