US oil falls below $50 for 1st time since 2009

Benchmark U.S. oil dipped to $49.77 before closing down $2.65, or 5 percent, to $50.04 a barrel. Brent crude, a global benchmark used to price oil used by many U.S. refineries, sank $3.31, or 5.9 percent, to $53.11.

In June of last year oil traded above $107 a barrel. But rising production outside of OPEC, especially in the U.S., boosted supplies just as weakness in the global economy slowed the growth in oil demand. OPEC's decision in November to maintain existing production levels accelerated the rout in oil prices.

Slower growth in China's economy, a driver of oil demand in recent years, and a strong dollar, which makes oil more expensive for holders of foreign currencies have also pressured oil prices.

On Monday Citigroup cut its forecast for 2015 global oil prices as a result of high supplies. Citigroup analyst Ed Morse wrote in the report that the first half of this year will bring "a step-up in oversupply, more volatility, and turmoil."

Morse reduced his forecast for global crude to an average of $63 a barrel for 2015, down from $80 a barrel.

Drillers around the world have already begun to trim exploration budgets and delay new projects as a result of low prices, but production from existing fields will continue and keep supplies high.

The last time U.S. oil traded below $50 was April 29, 2009.

The low oil prices have led to sharply lower fuel prices for shippers, airlines and drivers. Morse equated the drop in global oil prices to a $1.6 trillion stimulus package for the world economy.

On Monday the U.S. national average price of gasoline fell to $2.20 per gallon. That's $1.12 cheaper than last year at this time and the lowest since May of 2009. The Energy Department estimates the drop in gasoline prices will save U.S. households $550 this year.