Oil falls amid weak U.S. demand for petroleum

updated 2:57 p.m. ET Nov. 18, 2009

NEW YORK - Oil prices fell Wednesday as the government said American petroleum demand tumbled to its lowest level in four months.

Benchmark crude for December delivery gave up 38 cents to trade at $78.76 a barrel on the New York Mercantile Exchange. In London, Brent crude for December delivery lost 6 cents to $78.91 on the ICE Futures exchange.

The Energy Information Administration reported that petroleum consumption fell to its lowest level since July 17, and oil companies are importing less crude as they scale back their refining operations.

The U.S. stockpile of crude oil fell by 900,000 barrels last week, but the drop was hardly a sign of a recovering economy.

"Demand is still very, very weak," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "It's keeping us from sharing in the bullish euphoria that you're seeing in the stock market."

Auto club AAA did have some good news for the travel industry. The auto club said that 33.2 million Americans would get in their cars and travel at least 50 miles over the Thanksgiving weekend, next Wednesday through Sunday. That's an increase of 2.1 percent from 2008, even though a gallon of gas is 56 cents more expensive than the same time last year.

AAA, which based its report on a telephone survey, said the increase was a sign that consumers are more confident in the economy.

Some analysts expect weak global economic growth to keep commodities like oil from surging much higher. Global growth will likely average 2.5 percent a year during the next three years, about half the rate between 2002 and 2007, said Stephen Roach, Asia Chairman for Morgan Stanley.

"I don't see commodities repeating the boom-like surges," Roach said in Singapore.

In other Nymex trading, heating oil lost 2.47 cents to $2.0338 a gallon. Gasoline for December delivery fell less than a penny to $2.0003 a gallon. Natural gas for December delivery gave up 25 cents to $4.280 per 1,000 cubic feet.

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