NEW YORK — Oil prices plunged below $90 a barrel Monday, coming within reach of year-ago levels as a widening financial maelstrom spreads overseas and crimps global demand for energy.
A barrel of oil has not been this cheap in eight months, suggesting that the climate in which oil soared to unheard- of levels is coming to an abrupt end.
Crude’s stunning fall comes just three months after prices surged close to $150 a barrel.
Investors appeared to have little faith that the $700 billion rescue plan will provide a quick fix for the stumbling U.S. economy.
And the tumble has motorists cheering at the pump. The national average has dipped below $3.50 per gallon of regular unleaded gasoline.
Light, sweet crude for November delivery fell $6.07, or 6.4 percent, to settle at $87.81 a barrel on the New York Mercantile Exchange. It was crude’s fourth straight negative session and its lowest settlement since Feb. 6.
Oil prices have tumbled 40 percent since peaking at $147.27 a barrel July 11. A drop below $85 a barrel would leave prices where they were in late October, wiping out all of the past year’s massive gains.
The drop in crude prices continued to drag down pump prices. A gallon of regular shed 2 cents to a national average of $3.504, according to auto club AAA, the Oil Price Information Service and Wright Express. Prices peaked at $4.114 on July 17.
If crude prices continue their slide, gasoline could fall back below $3 a gallon as early as next month, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J. But consumers may not feel much relief given the whirlwind battering the economy.
Oil-market traders are watching to see if oil prices will sink to the next key technical level of $85 a barrel, the price when crude began its historic run-up late last year.
Pump prices are being pulled down by an oil-price crash that could take crude as low as $60 a barrel by the end of the year.
“If we take out that area, we could see a major washout of this market,” said Phil Flynn, analyst at Alaron Trading Corp. in Chicago. “We could be talking $50 or $60 oil.”
If that happens, analysts say, the Organization of the Petroleum Exporting Countries may cut production to keep prices from falling further.
Iranian Oil Minister Gholam Hossien Nozari on Saturday called on fellow OPEC members not to pump too much oil.
The Los Angeles Times contributed to this report.
