Oil prices slipped to their lowest level in more than three weeks Tuesday as investors focused on the dour economic outlook and its adverse effect on demand. Concern about falling demand due to the troubled economy has sent oil prices down more than $100 from a record high of $147.27 a barrel last summer.
On Tuesday, U.S. crude for March delivery settled down $2.01 to $37.55 a barrel, the lowest settle since Jan. 16, when prices settled at $36.51 a barrel.
Treasury Secretary Tim Geithner on Tuesday outlined the administration's plan to prop up the financial industry, saying the program could provide U.S. banks with up to $1 trillion in new capital.
"People are worried about the trillion dollar number," said Mark Waggoner, president of trading firm Excel Futures in Huntington Beach, Calif. "Where is this money coming from? That's really what it boils down to."
Meanwhile, the Senate approved an $838 billion plan to stimulate the economy through new spending programs and tax cuts.
The measure still needs to be reconciled with one passed last month by the House, and passed again by both houses of Congress. Democrats want President Obama to be able to sign the final measure on Presidents Day, next Monday.
Oil inventories: As demand for oil has dropped off, supplies of unused crude in the United States, the world's largest oil consumer, have been building. Stockpiles of crude oil have grown by millions of barrels per week over the past month.
On Wednesday, the Energy Department is expected to show an inventory buildup of 3.4 million barrels of crude last week, according to a poll of analysts from research firm Platts.
Stocks of oil will continue to build for the next several weeks as tankers that have been sitting off-shore unload their cargo, according to Waggoner. But the excess supplies of crude will eventually work their way through the system - probably by March, he said.
OPEC: Oil's plunge since last year has sent producers such as the Organization of Petroleum Exporters scrambling to prop up prices.
OPEC attempted to cut production by 2.2 million barrels per day in January, and the group's secretary-general Abdullah al-Badri hinted that more cuts may be coming.
About 80% of the previously agreed-upon cuts were complete, al-Badri told reporters Monday. He added that the group may take more action at its meeting scheduled for March 15.
"If we think we still need more action, I'm sure the conference will take more action to stabilize the market," al-Badri said, according to Reuters.
Gas: Meanwhile, the retail price for regular gas rose Tuesday to a national average of $1.928, up 0.4 cent from the prior day, according to a poll of gas station credit card swipes from motorist group AAA. It was the 13th consecutive increase in the daily survey.