Oil prices settle at January 2007 levels

SIOUX FALLS, S.D. — Oil slipped below $54 a barrel Wednesday as stock markets across the globe fell and yet another U.S. government report illustrated just how far the nation's housing market has fallen.

Governments, businesses and consumers have slashed energy, which has halved the price of crude since record highs in July.

Light, sweet crude for December delivery fell 77 cents to settle at $53.62 a barrel on the New York Mercantile Exchange, about where prices were in January of 2007.

Macro forces drove falling crude prices Wednesday, said Fred Rozell, retail pricing director at the Oil Price Information Service, with investors selling off in a "herd mentality," much as they crowded into the market over the summer.

Consumer prices plunged by the largest amount in the past 61 years in October as gasoline pump prices dropped by a record amount.

The Labor Department said Wednesday that consumer prices fell by 1 percent last month, the biggest one-month decline on records that go back to February 1947. The drop was twice as large as the 0.5 percent decline analysts expected.

For October, energy prices fell by a record 8.6 percent, led by a 14.2 percent drop in gasoline prices, also a record. With no definitive signs that the economy is stabilizing, industry analysts expect energy prices will continue to fall.

The nationwide average for regular gasoline is now $2.07, down 33 cents since the start of the month, according to the Energy Information Agency, and well below record-highs above $4 per gallon this summer.

Also dampening energy prices was more bad news from the housing industry.

Construction of new homes and apartments fell by 4.5 percent in October to an annual rate of 791,000 units, the Commerce Department reported. It was the slowest construction pace on records going back to 1959.

Supply disruptions that once roiled markets have not slowed crude's decline as falling demand has supplanted supply issues as the gravitational force on Nymex.

"Even reports of renewed rebel activity in Nigeria are not enough to spur a rally," Addison Armstrong, director of market research at Tradition Energy, said in a morning note.

Chevron Corp. invoked "force majeure" Tuesday on 90,000 barrels a day of its Nigeria gross production after a pipeline was breached by militants in the Niger Delta.