Oil dips to lowest level since October

NEW YORK -- Oil slid Friday to its lowest price in a month as investors started to pay more attention to a yearlong slump in American energy demand.

For most of the year, oil prices surged as investors pumped money into crude contracts to protect themselves from a weakening dollar. Oil was thought of as a safe bet with demand expected to rise next year, and crude prices doubled from March to October.

But as the recession wore on, consumers and businesses continued to use less gasoline, diesel and other petroleum products than a year ago. Refiners struggled.

Energy Information Administration data showed this week that refiners are operating at the lowest levels ever -- except for years when hurricanes disrupted operations in the Gulf of Mexico -- according to analyst Stephen Schork.

"That was a wake-up call," said Phil Flynn, an analyst with PFGBest. "People are starting to realize that maybe oil isn't the best hedge against inflation."

Benchmark crude for December delivery lost 44 cents at $76.50 a barrel on the New York Mercantile Exchange. Prices dipped as low as $75.57 earlier in the day, the cheapest since Oct. 15.

Exxon Mobil chief Rex Tillerson said Friday oil prices would be even lower if they were based totally on supply and demand. "Oil is about $20 to $25 a barrel higher simply it's priced in dollars, and there's a weak dollar," he said after a speech at the Asia-Pacific Economic Cooperation summit.

The EIA also said Friday that natural gas stockpiles continue to be the highest on record. The U.S. crammed another 25 billion cubic feet into storage last week, putting the country's inventory at more than 3.8 trillion cubic feet.

In other Nymex trading, heating oil fell 2.25 cents to $1.9685 a gallon. Gasoline for December delivery lost 1.33 cents at $1.9272 a gallon. Natural gas for December delivery fell 1.2 cents at $4.358 per 1,000 cubic feet.

In London, Brent crude for December delivery gave up 16 cents at $75.86 on the ICE Futures exchange.