Oil prices drop to lowest level in a year

Oklahoma is the first state with an average price below $3 a gallon since February.

NEW YORK (AP) — Oil prices closed at their lowest level in a year Thursday, falling below $85 a barrel even after OPEC signaled it may try to slow crude’s downward spiral by cutting production.

At the pump, retail gas prices kept falling, with a gallon of regular shedding 4.4 cents overnight to a new national average of $3.403, according to auto club AAA, the Oil Price Information Service and Wright Express.

In Oklahoma, regular gas dropped to an average of $2.987 a gallon, the first time average prices have fallen below $3 in any state since Feb. 21, said Fred Rozell, director of retail pricing at the Oil Price Information Service in Wall, N.J.

“Barring some sort of major event, it looks like we’ll see $3 gas as the national average in the next few weeks,” Rozell said.

Fearful that oil prices could fall too far and harm their petroleum-dependent economies, the Organization of Petroleum Exporting Countries said it would hold an extraordinary meeting Nov. 18 in Vienna, Austria to discuss the widening economic crisis and how it’s affecting the oil market.

The 13-member cartel said it would work “to ensure that oil market fundamentals are kept in balance and market stability is maintained.”

Light, sweet crude for November Delivery fell $1.81 to settle at $86.62 a barrel on the New York Mercantile Exchange, the lowest closing price since Oct. 15, 2007. In aftermarket trading, prices edged below $85, a key technical level that traders say could signal another plunge.

In London, November Brent crude fell $1.70 to settle at $82.66 on the ICE Futures exchange, after earlier falling to a one-year low of $80.40.

Crude has shed about $60 — or 40 percent of its value — since soaring to a record $147.27 on July 11. The massive losses come as a global financial downturn forces people and businesses everywhere to cut back.

Libyan national oil company chief Shukri Ghanem on Thursday called on oil-producing nations to cut output to “protect their interest [and] stop the loss of income.”

“However, OPEC’s aim is to create a balanced market, which neither harms the producers nor the importers,” Ghanem told The Associated Press.

OPEC controls 40 percent of the world’s oil supply, but many analysts doubt it will be able to slow oil’s descent just by tightening output. OPEC’s announcement that it would cut production by 520,000 barrels a day failed to halt oil’s drop.

Peter Beutel, oil analyst at Cameron Hanover, New Canaan, Conn., said history shows that OPEC cuts can rally prices for “a week, two weeks or a month.”

“But over a longer period of time, they’re incapable of stopping major moves,” Beutel said. “We’ve been down this road before, but OPEC refuses to learn this lesson.”

Given the dire U.S. economic conditions and waning energy demand, he said oil prices could be poised for another big drop.

“We have no idea at what price this economy can take. Nobody knows whether it’s $100 or $60 or $40,” Beutel said. “My guess is that we’re going to go a lot lower.”