Anchorage Daily News

SIOUX FALLS, S.D. -- Alaska and world oil prices continued their fall Monday, with North Slope crude closing at $51.45 on West Coast open markets, its lowest price since January 2007.

Analysts pointed to Japan's joining a number of European nations in recession and provided even more evidence of a broad deterioration in demand for energy as the reason for the continued slide of oil prices around the world.

"This is just a continuation of the weak demand theme in energy," said Jim Ritterbusch, president of energy consultants Ritterbusch and Associates.

Japan, the world's second-largest economy, said it slid into a recession for the first time since 2001 after gross domestic product contracted at an annual pace of 0.4 percent in the third quarter after a shrinking 3.7 percent in the second quarter. Japan now joins the 15-nation euro-zone in recession, defined as two straight quarters of GDP contraction.

"Markets are very worried about the international economic outlook, about oil consumption," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. "As data is released in the U.S., Europe and other countries, investors get a reminder of the economic problems in the developed world."

Oil revenue forms the foundation of the Alaska state budget. The current year's budget began July 1, and when legislators wrote it the state was forecasting an average oil price of $83 a barrel. Prices peaked in early July, right after the budget year began. So far the average price has been just over $100 a barrel.

The Federal Reserve on Monday said industrial output rose 1.3 percent last month, reflecting a return to more normal operations at chemical plants, oil refineries and drilling platforms following hurricanes that hit the Gulf Coast.

But Ritterbusch said he cautions clients not to read too much into one week of government figures as the numbers are often revised. He said several agency reports due this week should give a wider view of the nation's economy.

Labor releases its producer price index today and its consumer price index on Wednesday, Commerce releases housing starts on Wednesday and the Conference Board releases leading indicators on Thursday.

"We've got a pretty full schedule of releases so this was just one of them that we managed to get through," Ritterbusch said. "I'm not as confident about the rest of them being so optimistic."

Gasoline prices continued to drop overnight, with the national average price for regular dropping 1.8 cents to $2.09 a gallon, according to according to auto club AAA, the Oil Price Information Service and Wright Express. That is nearly $1 a gallon below what it was a month ago and nearly $2 below where it was in July when prices peaked at $4.11 per gallon.

Alaska gasoline prices remain the nation's highest, at $3.15 a gallon, down 3 cents on Monday, AAA said. In Anchorage, the average was $2.94 a gallon, unchanged from the day before.

Oil traders have been watching company profit reports in recent weeks for signals about the economy and energy demand. Monday was no different.

Lowe's said its third-quarter profit fell 24 percent as consumers postponed home-improvement projects and big-ticket purchases as an all-but-certain recession looms. Discount retailer Target Corp. said Monday that a difficult retail environment and weak results from its credit-card segment led to a 24 percent decline in third-quarter earnings.

Oil prices have tumbled more than 60 percent since peaking near $150 a barrel in mid-July.

OPEC announced another emergency meeting for the end of the month to try to shore up prices, but even a daily 1.5 million barrel production cut announced last month did not stop oil's slide.

Chakib Khelil, Algeria's energy minister and president of the Organization of Petroleum Exporting Countries, said the cartel hasn't yet fully enforced previous quotas or collected all current production data, and it isn't realistic to expect a decision during a Nov. 29 emergency summit convened in Cairo, Egypt.

On Saturday, Iran called on OPEC to reduce output quotas by up to another 1.5 million barrels a day at the Cairo meeting, but Khelil said the request is a "wish."

OPEC accounts for about 40 percent of world crude supply.

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