Oil prices fell more than 6 percent Thursday as gloomy data showed a world economy at risk of slipping into recession.
Bad news emerged from around the globe. A closely watched survey in Europe indicated a recession could be on the horizon, and a manufacturing survey suggested a slowdown in China, which has been one of the hottest economies. Prices for stocks and other commodities also plunged.
When the economy slows, so does demand for oil.
Oil has dropped 29 percent from a three-year high of $113.93 a barrel on April 29. The price has come down because high unemployment, weak consumer confidence and expensive gasoline have slowed demand.
The Federal Reserve on Wednesday said U.S. economic growth is slow, and that labor markets and household spending could stay weak.
The central bank announced a plan to push long-term interest rates lower — in an effort to stimulate spending by consumers and businesses — but investors said it would have only minimal impact because interest rates are already near record lows.
"This is just sudden and strong confirmation that the economy is not improving," said Michael Lynch, president of Strategic Energy & Economic Research. "Energy demand is going to be very poor."
The departing chief economist of the European Central Bank issued a rare public warning that heavy government debt threatened the euro. Juergen Stark is resigning before the end of his term amid talk that he is unhappy with the way the eurozone is handling its banking crisis.
Benchmark crude on Thursday plunged $5.41, or 6.3 percent, to end the day at $80.51 per barrel in New York. Oil finished at the lowest point since Aug. 9. Brent crude, which is used to price oil that's produced in foreign countries, fell $4.87, or 4.4 percent, to end at $105.49 in London.
The belief that global growth is slowing is also pushing down stocks, metals and fuels made from crude.
"This is part of a huge sweeping wave of deflation that's hitting every major asset," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
But at over $80 a barrel, oil remains nearly $6 more expensive that at this time last year. That can hurt consumers' wallets and corporate profits since crude is used to make everything from gasoline and heating oil to golf balls and perfume.
In other energy trading, heating oil fell 8.57 cents, or 2.9 percent, to finish at $2.8485 per gallon, and gasoline futures slipped 10.65 cents, or 4 percent, to end at $2.56 per gallon. Natural gas lost 2.5 cents to end at $3.705 per 1,000 cubic feet.
At the pump, the national average for gasoline fell a penny to $3.56 a gallon. That's down 42 cents from this year's peak of $3.98 on May 5. But it's still 84 cents higher than at this time last year.
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