After a month-long rally that repeatedly pushed oil prices to new highs, the cost of a barrel slumped for the fourth day in a row, dropping by nearly $2 to below $44.
Even with the declines, the price remains more than $10 above that of a year ago, and is above last month's highs -- and the impact is still rippling through the economy.
A man works on the pipelines of the Rumeila oil fields, near the city of Basra in Iraq.
(Nabil Juranee -- AP)
|
|
Analysts cited a variety of factors for yesterday's decline, including increased production in Iraq, where pipelines had previously been damaged by attacks. But others said that the drop reflected the market's realization that speculators had driven prices too high.
"Sanity and reason have prevailed over the maddening crowds," said Tom Kloza, senior analyst at the Oil Price Information Service in Lakewood, N.J. "It was just a sense of reason today."
Still, Kloza and other analysts cautioned that prices could easily change direction again, particularly if supplies are disrupted in Iraq or elsewhere.
On the New York Mercantile Exchange, benchmark U.S. crude oil for October delivery closed at $43.47 per barrel, down $1.74 from Tuesday's close. The price has declined nearly 11 percent from last Thursday's high of $48.70.
The still-high prices have battered some businesses while boosting the oil companies. The Federal Reserve blamed high oil prices for a recent sharp slowdown in the economy, but also anticipated that prices would ease.
The transportation sector has been especially hard hit as the cost of jet and diesel fuel has increased.
Truckers have passed along added costs to customers, hitting the manufacturing industry the hardest because it relies heavily on the transportation of goods. Airlines have suffered mounting losses as they are unable to pass along increasing fuel costs to consumers because of fierce competition.
Yesterday, executives from the nation's largest air carriers sent a letter to the Senate Commerce Committee asking for a hearing on the impact of high oil prices on the transportation industry, and for consideration of opening the Strategic Petroleum Reserve as a way to lower prices.
