Crude oil prices plunged below $50 on Monday as worries over the U.S. auto and banking industries has fueled demand concerns again. A stronger dollar also lessened the hedge appeal of commodities.
Light sweet crude for May delivery finished the session at $48.41, down $3.97 for the session. Prices touched as low as $48.11 in mid-day trading.
Stock markets plunged around the world as the U.S. government stated that bankruptcy might be the best solution for troubled automakers in the country, including General Motors, whose CEO Rick Wagoner has been forced to resign. Meanwhile, Treasury Secretary Timothy Geithner said some banks could need additional assistance.
The dollar rallied to its best level in two weeks versus the euro and a 1 1/2-week best against the pound as traders turned to lower-yielding currencies. Commodities usually move opposite the dollar.
Traders also looked forward to the release of the Energy Information Administration's inventory data on Wednesday. Last week's report showed crude oil inventories increased 3.3 million barrels in the week ended March 20. Analysts were expecting a rise of about 1.2 million barrels. The build is the 22nd in 26 weeks.
Oil lost nearly $6 in back-to-back sessions as investors bet a recent rally was overdone. Light sweet crude fell $1.96 on Friday. Prices touched as low as $51.64 after challenging $55 in recent days. In its first week as the front month contract, May crude closed up 31 cents.
According to AAA, gasoline prices inched up to $2.048 per regular unleaded gallon on average across the U.S. A month ago, prices averaged $1.903. Gasoline is still well below its year-ago level of $3.286.
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