Analysts said increased stocks and growing OPEC production were behind the downward drift, speculating that while the era of expensive oil wasn't over, prices could fall some more in the coming weeks.
The June contract for light, sweet crude on the New York Mercantile Exchange fell 12 cents to $49.60 a barrel in midday trading. The price of unleaded gas fell just over two cents to $1.4750 a gallon.
On Friday, oil prices closed below $50 a barrel -- a psychologically significant mark -- for the first time in more than two months after declining by more than $5 a barrel over the previous week.
"Rising oil supplies has been the fundamental reason for the fall down from $57 weeks ago," said Daniel Hynes, energy analyst at ANZ Bank in Melbourne, Australia.
In Vienna, PVM energy consultants said that with Nymex crude "having broken through a psychological threshold" of $50, "prices might continue to slip for a while." In its daily energy market report, PVM said that not counting Iraq, OPEC production was up by 345,000 barrels a day last month, to just over 30 million barrels.
It pointed to bearish U.S. inventory data, "with the third-highest crude imports ever of 10.86 million barrels a day filling up stocks by around five million barrels and pressuring prices."
"Levels are now 25 million barrels higher than last year, and 20 million barrels higher than the five-year average," it said.
Last week, the U.S. Energy Department said inventories of crude oil in the largest energy- consuming country grew by 5.5 million barrels to 324.4 million barrels, or 9% above year-ago levels -- the 10th time supplies have risen in 11 weeks.
Also last week, the U.S. Commerce Department announced that the U.S. economy grew at a slower-than-expected rate of 3.1% in the first quarter, easing concerns over booming demand for crude oil.
Traders, though, are still leery of declaring the end of high oil prices, saying that another run-up above $50 a barrel would hardly come as a surprise given still-tight global supplies and market jitters about even the slightest output disruption.
While oil futures have fallen from their recent peak above $58 a barrel, prices remain more than 30% higher than a year ago. Strong global demand, concerns about limited excess production capacity and fears of unplanned supply disruptions have kept prices high in recent years.
Copyright (c) 2005 The Associated Press