HOUSTON – Oil prices tumbled below $62 a barrel Thursday with more evidence that a long and painful recession may be on the way.
The number of Americans continuing to draw unemployment benefits surged to a 25-year high, the Labor Department said.
Light, sweet crude for December delivery fell more than 6 percent, or $4.08, to $61.22 a barrel on the New York Mercantile Exchange.
Oil prices have fallen about 56 percent since peaking at $147.27 a barrel in mid-July. They surged above $70 Tuesday as Americans elected Barack Obama their first black president, but a crude sell-off began Wednesday, when prices dipped 7.4 percent.
Also pressuring crude prices were interest rate cuts across Europe, where economic leaders were trying to spark grown.
In a note to clients, oil analyst Peter Beutel of Cameron Hanover said several factors are at play: a stronger dollar, renewed fears of recession and weaker equities markets, among them.
"Oil prices ... have been searching for a bottom for the last several days," the Cameron Hanover report said.
The dollar strengthened after the European Central Bank cut its key rate by half a percentage point to 3.25 percent Thursday, joining the Bank of England, Swiss and Czech central banks as they confront the looming recession.
The ECB announced the cut from 3.75 percent shortly after the Bank of England lowered its key interest rate by a startling 1.5 percentage points to 3 percent. The Bank of England's cut was more than the full percentage point that most analysts had predicted and the biggest cut in 27 years.
Commodities such as oil are used as a hedge against inflation and a weak dollar. When a central bank cuts interest rates, it tends to weaken the national currency, meaning the dollar can gain value.
When the dollar strengthens, it makes oil more expensive to buyers dealing in other currencies.
On the equities front, stocks fell throughout Asia and Europe on Thursday, led by Japan's benchmark Nikkei 225 stock average, down 6.5 percent, while Hong Kong's Hang Seng Index slid 7.1 percent.
London's FTSE share index and Germany's DAX both fell 4.6 percent, while France's CAC-40 was 3.8 percent lower.
The Dow Jones industrial average fell 160 points in early trading, as fresh readings on retail sales and jobless claims fanned investors' recession fears.
Retailers' October sales figures showed consumers pulling back spending sharply, while a Labor Department report said the number of people continuing to draw unemployment benefits jumped by 122,000 to 3.84 million in late October. It was the highest level since late February 1983, when the country was struggling to recover from a long and painful recession.
Other economic indicators out of the U.S. this week suggest the world's largest economy may be heading for its worst recession in decades. A Commerce Department report Tuesday said factory orders fell 2.5 percent in September from August, much worse than analysts had predicted.
On Monday, U.S. manufacturers reported poor figures for October, showing the worst reading in more than a quarter century.
The slowdown, sparked by a credit crisis that began last year, has spread across the world.
"The overriding factor is still the gloom in the global economy," said Gerard Rigby, energy analyst with Fuel First Consulting in Sydney. "Oil took sentiment straight from the stock market."
Gasoline fell again overnight, dipping 2.5 cents to a national average of $2.34 for a gallon of regular unleaded, according to auto club AAA, the Oil Price Information Service and Wright Express. The average price has fallen nearly 33 percent in the past month and, according to AAA, could be headed to $2 a gallon nationally by year's end.
In other Nymex trading, gasoline futures fell 7.7 cents to $1.347 a gallon. Heating oil dropped 8.6 cent to $1.9683 a gallon while natural gas for December delivery fell 29 cents to fetch $6.959 per 1,000 cubic feet.