The price of oil plunged again Monday and briefly dipped below $50 a barrel for the first time in more than five years as evidence mounted that the world will be oversupplied with oil this year.
Benchmark U.S. oil dipped to $49.95 before quickly rising back over $50. In early afternoon trading oil was down $2.29, or 4.3 percent, to $50.40 a barrel. In June of last year it traded above $107 a barrel.
Brent crude, a global benchmark used to price oil used by many U.S. refineries, was down $3.05, or 3.4 percent, to $53.37.
Oil has been falling for several months because global supplies are rising, especially in the U.S., at a time when weakness in the global economy is slowing the growth in oil demand.
On Monday Citigroup cut its forecast for 2015 global oil prices as a result of high supplies. Citigroup analyst Ed Morse wrote in the report that the first half of this year will bring "a step-up in oversupply, more volatility, and turmoil."
Morse reduced his forecast for global crude to an average of $63 a barrel for 2015, down from an earlier forecast of $80 a barrel.
Drillers around the world have already begun to trim exploration budgets and delay new projects as a result of low prices, but production from existing fields will continue and keep supplies high.
While OPEC members will likely export slightly less oil in the coming months, they have so far decided not to reduce official production targets.
Demand for oil in China, which has been the single biggest source of global oil demand growth in recent years, is slowing along with the country's economic growth. Also, the Chinese economy is becoming less energy-intensive.
The last time U.S. oil traded below $50 was April 29, 2009.
The low oil prices have led to sharply lower fuel prices for shippers, airlines and drivers. Morse equated the drop in global oil prices to a $1.6 trillion stimulus package for the world economy.
On Monday the U.S. national average price of gasoline fell to $2.20 per gallon. That's $1.12 cheaper than last year at this time and the lowest since May of 2009. The Energy Department estimates the drop in gasoline prices will save U.S. households $550 this year.
