Crude oil prices plunged nearly 9 percent on Thursday, tumbling below $100 a barrel in the United States, as weak economic indicators fanned fears of a new economic slowdown and investors rushed to cash in gains on crude contracts.
Commodity prices fell across the board, dropping more than they had since 2009, as renewed economic anxiety settled in and the U.S. dollar rose, making commodities somewhat more expensive for people holding other currencies.
The sudden pullback in crude oil markets came as the price of regular gasoline rose to within a penny and a half of $4 a gallon nationwide. The nationwide average is the highest it has been at this time of year since the Energy Department began tracking prices in 1990.
And the average pump price for regular gasoline sailed past $4 in the D.C. metropolitan area Thursday for the first time since 2008, settling just 9 cents shy of the all-time record, according to AAA.
With the overall economy continuing to falter, Americans are blaming an array of culprits for the increases at the pump, according to new data from a Washington Post-Pew Research Center poll.
Nearly one in three point the finger at a combination of greed, speculation and oil companies. About one in five say prices are up because of wars and the spreading unrest in the Middle East and North Africa. Around one in eight say it’s something political or policy-related that has gas prices spiking higher; a similar proportion says it’s an economic factor, like the time of year.
There are few differences across party lines, although Democrats are the most apt to say it’s war and unrest in the Muslim world that’s causing the price jump.
But there are sizable differences by age. Fully 42 percent of seniors say greed and speculation are behind higher gas prices, compared with just 13 percent of adults aged 18 to 29. Young adults are twice as likely as seniors to say economic factors and overseas developments are the primary causes.
This question was asked in a telephone poll conducted April 28 to May 1. The results have a margin of sampling error of plus or minus 3.5 percentage points.
Some of the pressure of rising gasoline prices could ease if Thursday’s drop in crude oil persists and if oil companies pass the savings on to consumers — possibly shaving 25 percent from pump prices, said Adam E. Sieminski, chief energy economist at Deutsche Bank.
“I think that there’s a huge amount of worrying going on about the economy,” Sieminski said. “The double dip theory of the economy is back. And if the economy dips, crude oil and everything else is going to drop with it.”
Some oil analysts said that crude oil prices had risen too high, too fast because of anxiety about political risks, an element of speculation and excessive optimism about consumption.
“We saw the market as being increasingly vulnerable to a correction,” said David Greely, an analyst at Goldman Sachs. “At those elevated price levels, you had to take into account the risk of a pullback if there were not another supply shock. Plus there were negative signs on the demand front.”
Greely said that Thursday’s drop was triggered by a weak report on the non-manufacturing side of the economy, weak German manufacturing orders and a surprisingly large number of U.S. initial jobless claims.
“Those acted as catalysts for the sell-off,” Greely said.
Also, on Wednesday, the Energy Department’s Energy Information Administration released weekly statistics that showed a sag in gasoline consumption, which for the 16th week in a row fell short of consumption in 2010. Not surprisingly, the difference has been growing as prices rise, declining 3.7 percent last week compared to the year before.
Given the rise in prices, however, many analysts said that the emerging decline in gasoline consumption was modest, and they said that crude oil prices would remain relatively high compared to historical levels.
“As we look forward to next year, we see supply and demand fundamentals becoming increasingly tight and we see prices moving at or above levels we’ve seen recently,” Greely said. “So we’ll probably be revisiting these price levels next year.”