Oil Prices Fall Below $50 on Recession Fears

New York, NY, Nov. 20, 2008--Oil prices fell below $50 to a two-year low Thursday in Asia as investors priced in lower crude demand from a global economic downturn that's shaping up as the worst in decades.

Light, sweet crude for December delivery was down 92 cents to $49.75a barrel in electronic trading on the New York Mercantile Exchange by midafternoon. It was the lowest price since May 2005.

"People are saying this slowdown could be the worst since the Great Depression," said Toby Hassall, an analyst with investment firm Commodity Warrants Australia in Sydney. "There's definitely fear out there that it's going to be pretty severe."

Concerns that Congress may not approve a $25 billion rescue package for ailing U.S. carmakers General Motors Corp., Ford Motor Co., and Chrysler LLC helped drag the Dow Jones industrial average down 5.1 percent Wednesday to its lowest level since March 2003.

Asian stocks were on the skids Thursday with Japan's benchmark Nikkei index falling 6.9 percent, Hong Kong's Hang Seng index off 5.6 percent and the Korea Composite Stock Price Index sliding 6.7 percent.

"The stock markets are representing investor pessimism regarding the economic outlook and what we have in store over the next year," Hassall said. "I think we're going to see oil test $50 sooner rather than later."

On Wednesday, the U.S. Department of Transportation provided more evidence that the slowdown continues to hurt gasoline consumption, even as prices fall. Americans drove almost 11 billion fewer miles in September, the department said.