NEW YORK — Oil prices tumbled to five-week lows Monday on growing evidence of an extended recession that could mean demand for energy will remain weak for some time.
Benchmark crude for August delivery fell $2.68 to settle at $64.05 a barrel on the New York Mercantile Exchange.
It was the fourth straight day of declines on Nymex and since the beginning of the month, crude prices have fallen about 8 percent. Prices fell as low as $63.40 Monday.
Natural gas prices plunged as well.
Major energy users, like industrial manufacturers, have been hit hard by the recession and unemployment data released last week in both the U.S. and Europe doused hopes for a quick recovery.
“The recent evidence concerning the U.S. economy is terrible. The news regarding Europe seems no better,” said economist Philip Verleger. “This suggests oil use will continue to decline for another year.”
Oil prices had been rising for months on the belief that the economy would improve by the end of the year. Prices have also been pushed higher by the weak U.S. currency.
Because crude is bought and sold in dollars, it essentially becomes cheaper when the dollar falls against other currencies. And the dollar has fallen steadily with the U.S. government spending billions to prop up major banks and the auto industry.
Doubts about how long the weak U.S. currency can sustain prices have begun to tamp down prices.
Even last week, when oil prices hit an eight-month high above $73 per barrel, it was another sign of how volatile the market has become. A barrel of oil fell midway through the day last Tuesday and prices have been declining since.
The spiking price of energy had baffled experts because demand for everything from crude to gasoline is dismal. The U.S. is mired in recession and Americans are driving billions fewer miles than they have in past years.
Retail gasoline prices rose every day for nearly two months as refiners slashed production. That streak finally ended two weeks ago and prices at the pump have fallen every day since.
Gasoline prices fell again overnight to a new national average of $2.611 a gallon, according to the Oil Price Information Service and AAA.
The drop comes after the July Fourth holiday, one of the busiest driving weekends of the summer.
Prices for gasoline are likely to fall further, said AAA spokesman Geoff Sundstrom.
“With the economy still limping along, we don’t really see a reason for gasoline demand to increase,” he said.
In other Nymex trading, gasoline for August delivery fell 5 cents to $1.7412 a gallon and heating oil slid 6.13 cents to $1.6403. Natural gas for August delivery shed 12.6 cents to $3.489 per 1,000 cubic feet.
In London, Brent prices dropped $1.21 to $64.40 a barrel on the ICE Futures exchange.
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