Oil closes at a five-year low below $60

Last Updated Dec 12, 2014 7:13 AM EST

The price of oil fell below $60 for the first time since July 2009 on Thursday and ended trading in New York at $59.95.

Benchmark U.S. crude oil dropped 99 cents, or 1.6 percent. Oil has fallen steadily for nearly six months, and is down 44 percent since reaching a high for the year of $107.26 in late June.

"We don't see a price bottom," wrote energy analyst Jim Ritterbusch in a note to investors. He expects oil to fall further, toward $55 a barrel, in the short term.

On Friday, prices fell even more after the International Energy Agency lowered its forecast for global oil demand next year.

In its monthly oil report, the agency said global oil demand in 2015 will grow by 900,000 barrels a day, 230,000 less than previously forecast.

Following the report Friday, the benchmark New York oil price slipped further below $60 a barrel. In late morning trading in London, it was 72 cents lower at $59.23. Brent, the international standard, was 74 cents lower at $62.94.

The IEA said several years of record high prices have "induced the root cause" of the rout in oil prices in recent months - the surge in non-OPEC supply to its highest growth ever and a contraction in demand growth to five-year lows.

The price drop is a result of rising global oil production, especially in the U.S., at a time when demand has weakened because of slowing economies in Asia and Europe.

OPEC said this week that higher production from non-OPEC members and global economic growth will reduce demand for its oil to 28.9 million barrels a day next year. That's the lowest level in more than a decade, and far less than the 30 million barrels per day that the group says it plans to produce next year.

The price collapse has pushed down prices for gasoline, diesel and other fuels, lowering expenses for drivers, shippers and airlines and giving a boost to consumer-driven economies like that of the U.S.

The average price of gasoline in the U.S. fell to $2.61 a gallon Thursday, according to AAA. That's 64 cents below last year at this time, saving U.S. drivers $7 billion a month. The Energy Department predicted this week that lower gasoline prices next year will save a typical U.S. household $550 over the course of the year.

Lower crude prices have sent the share prices of oil companies and drilling services companies spiraling lower, though, and caused many to cut back drilling projects.

As a result, the Energy Department this week trimmed its forecast for oil production growth in the U.S. for next year, though it still expects a sizeable increase. BP (BP) announced a $1 billion restructuring plan this week that analysts said could result in the elimination of thousands of jobs.

The lower prices are also pressuring government budgets in oil-producing U.S. states and cash-hungry oil exporters such as Iraq, Iran, Russia and Venezuela.