WASHINGTON -- Oil prices tumbled for a third consecutive day Tuesday, briefly falling below $45 a barrel, as geopolitical concerns that had brought the market to a boil in recent weeks appeared to cool off.
That said, even analysts who doubt the current supply-demand balance is as dire as today's price levels suggest cautioned against declaring the end of the bull market.
Light crude for October delivery fell as low as $44.75 before settling at $45.21, a decline of 84 cents on the New York Mercantile Exchange.
Crude futures closed at $48.70 on Thursday - the highest Nymex settlement on record. When adjusted for inflation, oil is more than $11 cheaper than it was leading up to the first Gulf War.
Tom Kloza, director of Oil Price Information Service, a Lakewood, N.J., provider of industry data, was reluctant to interpret the three-day slump as evidence that oil prices had peaked, even though he believes the market has been overheated for weeks.
"I think the big bull market is getting old," Kloza said. "It's getting into its last couple of innings at the very least."
Before the recent retreat, prices had charged higher for weeks as traders expressed worries about the threat of sabotage against the Iraqi oil infrastructure and the possibility that the Russian government's efforts to collect $3.4 billion in back taxes from Yukos could cause its output of 1.7 million barrels a day to fall.
Contributing to the run-up was a rash of buying by institutional investors speculating that prices would go higher, analysts said.
By late last week, it seemed almost inevitable that oil prices would top $50, and analysts said that milestone could indeed be tested again before the year is up.
Phil Flynn, an analyst at Alaron Trading Corp. of Chicago who has been one of many market observers fearful of supply disruptions, said Tuesday "the market was a little bit ahead of itself."
But Flynn believes oil prices will stay in the mid-$40 range so long as tensions in Iraq remain high and the fate of Russian oil giant Yukos remains unclear.
Cambridge Energy Research Associates, a Cambridge, Mass.-based consulting group, said in a recent report that "as long as market psychology is dominated by fear of a supply disruption, $50 oil remains a very credible possibility."
CERA said it would take the removal of 500,000 barrels to 750,000 barrels of oil per day - for several weeks - to push prices above that level.
Iraq-related concerns were muted Tuesday after reports that oil exports in the north resumed at a rate of 400,000 barrels to 450,000 barrels a day and that exports from the southern port of Basra were back up to 1.8 million barrels a day.
"Iraq is pumping again and that's definitely added to bearish sentiment," Flynn said.
On Monday, Yukos reduced its crude output forecast for the year by about 4.5 percent. But traders said markets were soothed somewhat by comments made late Monday by Russian President Vladimir Putin, who told President Bush that Russian oil companies are increasing production and exports and will continue to do so.
"I think we were long overdue for a selloff," said Mike Fitzpatrick, a trader at Fimat USA in New York.
But Fitzpatrick and others said there is only limited excess supply capacity worldwide and that this would keep pressure on markets unless there is a significant drop in demand or rise in output.
PFC Energy, a Washington-based consulting group, said in a recent report that "this may be a bubble, but it is small and is sitting on top of a solid foundation of fundamentals" justifying prices in the low- to mid-$40 range.
In London, Brent crude for October delivery slipped 71 cents to settle at $42.32 on the International Petroleum Exchange.