Oil prices waver on skimpy crude inventory report

Light, sweet crude for January delivery fell 17 cents to settle at $46.79 a barrel on the New York Mercantile Exchange. Crude dipped to $46.26, the lowest level since May 20, 2005, when it traded at $46.20.

There are growing signs that crude, which has fallen $100 per barrel since mid-July, is rattling oil producing nations.

In Iran, state media reported Wednesday that President Mahmoud Ahmadinejad has acknowledged publicly for the first time that tumbling oil prices are gouging the country's fragile economy and will force his government into spending cuts.

The economic spillover in Iran began in the U.S., where Americans have drastically cut back on miles driven. Gasoline prices have plummeted to three-year lows.

"It's going to be a slow arduous process and we will see oil bottom well ahead of the end of the recession," said Jim Ritterbusch, president of energy consultants Ritterbusch and Associates. "But where and when that happens is still up for grabs."

The U.S. economy has been in a recession since for about a year, making the current downturn the longest in a quarter century, according to a panel of economists with the National Bureau of Economic Research.

Markets waiting the release later this week of U.S. unemployment figures may have had an indicator of what's to come Wednesday.

Non-farm private employment decreased 250,000 from October to November 2008 on a seasonally adjusted basis, according to the ADP National Employment Report.

Also on Wednesday, the U.S. Labor Department reported that worker productivity slowed in the summer while wage pressures increased, but both developments were not as bad as feared.