Crude oil slips under $100 a barrel

Oil futures extended their declines Thursday, March 20, sliding below $100 a barrel at times as concerns about the economy and demand for oil grew and the dollar strengthened. Retail gas prices, meanwhile, fell further below their recent records, while diesel rose to a new record above $4 a gallon.

For a second day, the oil market appeared focused on the economy and oil’s underlying supply and demand fundamentals – factors it ignored in recent weeks while rocketing to a series of new records. However, some analysts said oil’s price swoon may not last for long; most investors expect the Federal Reserve to cut interest rates several more times this year, moves that are sure to put new pressure on the dollar.

Lower interest rates tend to weaken the dollar, driving investors to commodities such as oil that they view as a hedge against inflation. A lower dollar also makes oil less expensive to overseas investors – a trend that reverses when the dollar strengthens, as it did March 20.

But there are signs the market may be divorcing itself from its focus on the dollar. Prices were pressured on March 20 when the Labor Department said the number of people filing for unemployment benefits jumped by 22,000 from the previous week, much more than expected. A sharp slowdown in the economy could reduce demand for oil and gasoline. On March 19, the Energy Department said gasoline demand dropped by 1 percent the previous week.

Oil has fallen sharply, dropping about 10 percent, since setting a new trading record of $111.80 on March 17.

— The Associated Press