Oil prices continued to decline yesterday, closing just below $50 a barrel for the first time in nearly a month.
Analysts cited a variety of factors, including easing concerns about threats to supplies, traders taking profits while prices are high and expectations that U.S. stockpiles of oil will continue to increase.
Still, analysts said they did not expect the recent decrease would be the start of a long-term trend.
"So far it looks like a correction," said Daniel Lippe, a Houston-based analyst for consultant Petral Worldwide Inc. "We're in a bull market for crude, and we haven't left the bull market for crude."
U.S. benchmark crude for December delivery closed yesterday at $49.62 a barrel on the New York Mercantile Exchange. Prices were down 51 cents from the day before.
Since Oct. 26, when oil closed at $55.17 a barrel, prices have decreased by about 10 percent. Oil has been above $50 a barrel since Oct. 5, and economists have warned that prices have been a drag on the economy. While prices remain high, they are far from their inflation-adjusted peak of about $80 in 1981.
Gasoline prices have eased slightly in recent days. A gallon of regular gasoline averaged nearly $2.02 yesterday, down a cent from the day before, according to a AAA auto club survey. Prices remain just below their record of $2.05 a gallon set in May.
Oil prices have been elevated because of concerns about increasing demand and tight supply. The world has been pumping oil close to its capacity and traders have worried that any significant production disruption could lead to a shortage.
The downward trend in prices began last week after data showed a larger-than-expected increase in U.S. oil stockpiles, analysts said. Several said they expected that data to be released today would show a continuation of that trend.
Other factors have contributed as well, including reports yesterday of increasing oil production in the Gulf of Mexico, where Hurricane Ivan in September seriously damaged oil equipment and hampered production.
Traders said fears about production disruptions from a threatened strike in Nigeria diminished slightly yesterday.
Warren Epstein, an oil trader at Kabrik Trading LLC in New York, said prices also have been pushed down amid discussion of the potential for a victory by the Democratic presidential candidate, Sen. John F. Kerry of Massachusetts. Kerry has talked about refraining from adding more oil to the U.S. Strategic Petroleum Reserve while prices are high, which could put more oil on the market, he said.
"It's obviously extremely volatile," Epstein said of the market. "How this election plays out will have an impact."