Crude Oil Drops to January 2007 Levels

By Dirk Lammers

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% 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% decline analysts expected.

For October, energy prices fell by a record 8.6%, led by a 14.2% 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.