In Oklahoma, regular gas dropped to an average of $2.987 a gallon, the first time average prices have fallen below $3 in any state since Feb. 21, said Fred Rozell, director of retail pricing at the Oil Price Information Service in Wall, N.J.
"Barring some sort of major event, it looks like we'll see $3 gas as the national average in the next few weeks," Rozell said.
Fearful that oil prices could fall too far and harm their petroleum-dependent economies, the Organization of Petroleum Exporting Countries said it would hold an extraordinary meeting Nov. 18 in Vienna, Austria to discuss the widening economic crisis and how it's affecting the oil market.
The 13-member cartel said it would work "to ensure that oil market fundamentals are kept in balance and market stability is maintained."
Light, sweet crude for November Delivery fell $1.81 to settle at $86.62 a barrel on the New York Mercantile Exchange, the lowest closing price since Oct. 15, 2007. In aftermarket trading, prices edged below $85, a key technical level that traders say could signal another plunge.
In London, November Brent crude fell $1.70 to settle at $82.66 on the ICE Futures exchange, after earlier falling to a one-year low of $80.40.
Crude has shed about $60 - or 40 percent of its value - since soaring to a record $147.27 on July 11. The massive losses come as a global financial downturn forces people and businesses everywhere to cut back.
Libyan national oil company chief Shukri Ghanem on Thursday called on oil producing nations to cut output to "protect their interest (and) stop the loss of income."
"However, OPEC's aim is to create a balanced market, which neither harms the producers nor the importers," Ghanem told The Associated Press.
OPEC controls 40 percent of the world's oil supply, but many analysts doubt it will be able to slow oil's descent just by tightening output. OPEC's announcement that it would cut production by 520,000 barrels a day failed to halt oil's drop.
Peter Beutel, oil analyst at Cameron Hanover, New Canaan, Conn., said history shows that OPEC cuts can rally prices for "a week, two weeks or a month."
"But over a longer period of time, they're incapable of stopping major moves," Beutel said. "We've been down this road before, but OPEC refuses to learn this lesson."
Given the dire U.S. economic conditions and waning energy demand, he said oil prices could be poised for another big drop.
"We have no idea at what price this economy can take. Nobody knows whether it's $100 or $60 or $40," Beutel said. "My guess is that we're going to go a lot lower."
Meanwhile, oil market traders continue to watch a fast-unfolding financial crisis. The U.S. Federal Reserve, along with central banks in Europe and China cut interest rates Wednesday in a bid to jump-start lending. But U.S. stocks sank in response Wednesday and continued to fall Thursday.
"Traders are expecting the world to move toward recession, with the U.S. and Europe especially a concern," said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney. "Based on the short-term trend, you could see prices approaching $80 next week."
Weighing on prices was evidence of falling demand in the U.S, where crude inventories jumped by 8.1 million barrels last week while gasoline stocks surged 7.2 million barrels, the Energy Information Administration said Wednesday in its weekly inventory report.
Both increases far exceeded expectations, reflecting both persistently weak demand and a recovery of the Gulf Coast energy complex that had been shut down by hurricanes Gustav and Ike.
"Overall demand for oil fell for a fifth straight week and year-on-year demand fell for a 24th straight week" this year, noted trader and analyst Stephen Schork in his Schork Report. "In fact last week demand ... fell to the lowest level since the week following the 9/11/2001 attacks."
Demand for gasoline was also weaker, falling 5.3 percentage points over the four weeks ended Oct. 3 compared to the same period a year earlier, according to the EIA report.
In other Nymex trading, heating oil futures fell 7.59 cents to settle at $2.4186 a gallon, while gasoline futures fell less than half a penny to $2.0273 a gallon.
Natural gas for November delivery rose 8.3 cents to settle at $6.825 per 1,000 cubic feet.
