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Oil prices briefly plunged below $78 a barrel Friday (Oct. 10), dropping to the lowest level in nearly 13 months as investors grow more pessimistic about the prospects for resolving a mushrooming global economic crisis.
The Associated Press reported that light, sweet crude for November delivery ended the day $8.89 lower at $77.70 a barrel on the New York Mercantile Exchange.
“Oil is mirroring the stock market right now. There’s a total lack of confidence. It’s fear driving more fear,” said Phil Flynn, energy analyst at Alaron Trading Corp. in Chicago.
Wall Street seesawed Friday, with the Dow Jones industrials dropping nearly 700 points in the early going and fluctuating wildly in the last hour while investors looked for bargains. The Dow Jones finished down 128 points at 8,451.19 while recording its worst week ever as investors still worried about credit markets that remain near paralysis.
Crude has now lost about 45% since hitting a record $147.27 on July 11, tumbling as a deepening credit crisis caused by the subprime mortgage fiasco wreaks havoc around the globe and drives down energy demand.
Investors have shrugged off an array of market-stabilizing efforts by world governments, including a $700 billion U.S. financial rescue plan, several bank bailouts and a coordinated interest rate cut by the Federal Reserve and central banks around the globe.
Underscoring Americans’ waning appetite for fuel, a gallon of regular gasoline dropped 5.3 cents overnight to a new national average of $3.35 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express.