Crude Follows Wall Street's Wild Ride

By Mark Williams

COLUMBUS, Ohio -- Oil prices swung wildly Thursday following a lead from Wall Street, which sank 300 points before investors flooded back into the market.

Light, sweet crude for December delivery rose $2.08 to settle at $58.24 on the New York Mercantile Exchange. Crude earlier dipped as low as $54.67, a price last seen in January 2007, on reports that the world's biggest economies are in recession and that energy demand has declined to decade-ago levels.

The Dow dropped briefly below 8,000 -- falling more than 300 points -- to retest lows that it hit Oct. 10 before a sharp climb into positive territory. The S&P 500 index dropped to 818.69 before staging its own strong rally.

"The main driver is the turnaround in the S&P," said Addison Armstrong, director of market research at Tradition Energy.

There was also chatter about yet another extraordinary meeting by the Organization of Petroleum Exporting Countries to cut production for the second time in less than a month.

"They might actually mean it this time," said Mike Zarembski, senior commodity analyst at OptionsExpress.

"We're still in a downtrend, but even in a downtrend there are up days."

There are serious doubts about OPEC's ability to control prices through production levels. Energy analysts increasingly have come to believe that demand, not supply, is in control of the market.

OPEC slashed production quotas by 1.5 million barrels a day when they met at the end of October.