Oil prices fell to below $39 a barrel Tuesday on new evidence of weakness in the U.S. housing market and a contracting gross domestic product (GDP) that suggests the recession may be worsening. Light sweet crude oil for February delivery fell 93 cents to $38.98 on the New York Mercantile Exchange after falling below $38 earlier in the session. Oil traders have grown increasingly pessimistic about the global economy, and therefore world energy demand. Oil prices have fallen 73 percent since July, with massive U.S. job layoffs and weak consumer spending contributing to lower demand for energy. Economists now believe a small decline in U.S. economic activity in the third quarter has significantly worsened. The Commerce Department reported Tuesday that GDP fell at an annual rate of 0.5 percent in the July-September period, and corporate profits fell 1.12 percent. However, some economists believe third-quarter GDP decline could be as large as 6 percent. If true, that would be the worst quarterly drop since 1982. The Commerce Department also reported Tuesday that sales of new homes fell last month to the slowest pace in almost 18 years, while new-home prices dropped by the biggest amount in eight months.
