Oil prices hit a new 22-month low Thursday on reports that the world's developed economies are in recession and that energy consumption is evaporating.

Crude has fallen 12 percent this week alone under a daily barrage of economic predictions that industries and consumers have cut back on spending. Gasoline prices have fallen nearly 50 percent since hitting a record national average of $4.11 per gallon in July.

While tumbling gas prices are a relief for consumers who have been shaken by job losses and declining home prices, economists now fear that the resulting decline in exploration and production by oil companies will lead to a massive price spike when economies rebound.

On Thursday, the Labor Department reported a larger-than-expected jump in unemployment claims and Wal-Mart Stores Inc., world's largest retailer and a barometer for consumer spending, cut its full-year outlook.

On Wednesday, the price of crude for December delivery fell for the 59th time since the peaking of the July bubble when prices hit a $147 a barrel, with the contract falling an average $1.09 per barrel over the last 88 sessions, according to information complied by trader and analyst Stephen Schork.

"It's quite a fall," he said. "To be honest, I think we can go below $50. I think there is outside chance we can see $40."

Light, sweet crude for December delivery fell 90 cents to $55.26 a barrel on Thursday on the New York Mercantile Exchange. Crude earlier dipped as low as $54.67, a price last seen in January 2007.

In London, December Brent crude fell 87 cents to $51.50 a barrel on the ICE Futures exchange, a three-year low.

On Thursday, the Organization for Economic Cooperation and Development said the U.S., Europe and Japan are in a recession, the first time all three have been in a downturn together since 1974-5 when Western nations were under duress from an Arab oil embargo and a severe bear market for stocks.

The Paris-based group said the U.S. economy would contract next year by 0.9 percent, Japan's by 0.1 percent and the euro area by 0.5 percent. It said the gross domestic product was likely to fall by 0.3 percent in 2009 for its 30 member countries, representing democracies with market economies.
For the fourth quarter, the organization said its members would likely see a contraction of 1.4 percent on a year-on-year basis, with the U.S. down 2.8 percent, and Japan and the euro area 1.0 percent lower.

The latest forecasts were a sharp downgrade from June, when it forecast growth of 1.7 percent in 2009 and suggested the worst of the financial crisis may have passed.

Also on Thursday in Paris, the International Energy Agency slashed its demand forecast more than it has in a decade.

The agency now expects global oil demand to average 86.2 million barrels a day this year, nearly flat compared with 2007, and 86.5 million barrels a day next year. The cuts come on top of those already made in the IEA's October and September reports.

Oil demand within the 30 OECD countries now is forecast to fall by 2.7 percent this year and by 1.6 percent in 2009, in the IEA's latest view.

The agency warned on Wednesday that more than a trillion dollars in annual investments to find new fossil fuels will be needed for the next two decades to avoid an energy crisis that could choke the global economy.

But investment by the oil industry looks increasingly unlikely, at least in the near future.

The Labor Department reported Thursday that jobless claims last week increased by 32,000 to a seasonally adjusted 516,000. That nearly matched the 517,000 claims reported seven years ago, and is only the second time since 1992 that claims have topped 500,000.

The total also was much higher than analysts expected.

Prices at the pump continued to fall, dropping 2.4 cents overnight to $2.178, according to auto club AAA, the Oil Price Information Service and Wright Express.

Prices in some parts of the country were even lower, hitting $1.63 in Kansas City, Mo., and $1.74 in Tulsa, Okla., according to GasBuddy.com, which lets consumers post prices.

The continuing decline comes as crude inventories remained flat in the U.S. last week, while gasoline stockpiles rose much more than expected, according to government data released Thursday.

The Organization of Petroleum Exporting Countries, which produces about 40 percent of world supplies, has signaled it may cut production before its next meeting in December on top of a 1.5 million barrel reduction in output quotas last month.

Thursday's pessimistic IEA oil demand forecast could speed up OPEC's decision for another quick production cut.

For the week ended Nov. 7 crude-oil inventories remained at 311.9 million barrels, which is 2 percent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.

Analysts had expected a boost of 1.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

It was the second consecutive week in which inventory was flat.

In other Nymex trading, heating oil futures fell 1.94 cents to $1.816 a gallon, while gasoline prices fell 3.12 cents to $1.2169 a gallon. Natural gas for December delivery slid 28 cents to $6.125 per 1,000 cubic feet.