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Oil briefly dropped below $55 a barrel Friday (Nov. 17) to its lowest level since mid-2005 amid fund selling across commodity markets on worries of an economic slowdown in the world’s largest energy consumer, the United States.
Reuters reported that high U.S. oil inventories heading into winter, and selling pressure ahead of the end of the front-month U.S. crude contract at the close of trading Friday, fueled the selling.
U.S. crude was down 61 cents at $55.65 a barrel after hitting its lowest level since June 14 last year at $54.86. The price has fallen nearly 30% from the record of $78.40 in July. London Brent crude rose 11 cents at $58.65.
“There is rising concern that we could be going into a U.S. economic slowdown,” said Rick Mueller, senior oil analyst at consultancy ESAI. “This fall also speaks of a well supplied crude market and a warmer outlook in the U.S., and with those conditions maybe the market is starting to wake up to the fact that prices shouldn’t be near $60.”
U.S. industrial output data reported for October on Thursday was weak, showing signs of a cooling economy.
Oil markets had traded in a roughly $58-$62 barrel range for around six weeks, the longest period of range-bound trading since the same time a year ago.