Oil continued its downward march Thursday as mass layoffs pushed the U.S. economy deeper into recession, signaling a drastic pullback on energy spending.
Light, sweet crude for February delivery fell $2.94 to settle at $41.67 a barrel on the New York Mercantile Exchange. The January contract, which closes today, fell 9 percent, or $3.84, to settle at $36.22 after dropping as low as $35.98, levels last seen in June 2004.
Higher prices for the February contract suggest that oil brokers and traders believe OPEC’s unprecedented 2.2 million-barrel daily production cut, announced Wednesday, will tighten supply.
The Organization of Petroleum Exporting Countries had already taken 2 million barrels of oil out of production, bringing total cuts to more than 4 million barrels per day.