An abrupt about-face in the sizzling oil market Monday sent oil prices tumbling across the board and offered consumers a tantalizing indication that the price of oil had finally reached its limit and was set to begin a welcome cooling trend.

November crude futures plunged more than $1 per barrel on the New York Mercantile Exchange, while gasoline came off equally as hard following a new report from OPEC projecting a slowdown of the world economy next year that would result in a corresponding lessening of energy demand.

The world oil demand growth forecast for 2004 has seen a further upward revision of 0.11 million barrels per day to 2.6 million bpd due to this year's stronger than expected expansion in the world economy, OPEC said in its latest monthly market report released Monday.

In contrast, it warned, due to lower than anticipated global economic growth and the possible effect that price levels could have on demand, oil demand growth in 2005 has been revised down by 0.13 million bpd to 1.61 million bpd.

OPEC has consistently warned that high-priced oil was not in their best long-term interests precisely because added costs could weigh down the economy and eventually cripple demand and torpedo lofty prices.

Until now traders had been inclined to put OPEC's jitters on the back burner and instead focus on the bullish combination of uninhibited demand in the United States for gasoline and distillate fuels, including jet fuel, heating oil and diesel. The result has been crude routinely setting record highs on NYMEX and gasoline-pump prices that Monday considerably topped $2 per gallon on a nationwide-average basis.

Those inflated levels may or may not last, as was indicated Monday by the rout on the New York Mercantile Exchange. A major indicator will come Wednesday when the U.S. Energy Information Administration and the American Petroleum Institute release their weekly surveys of U.S. oil inventories.

It appeared by early Monday afternoon that November crude could lose as much as $2 per barrel, although the retreat stabilized late. Nevertheless, crude finished $1.26 lower at $53.67 per barrel.

Some market reports indicated that crude's support on NYMEX was kicked away by the heavy selling of gasoline futures, which caused a precipitous drop in prices for November and December.

Trading on the November unleaded contract expires Wednesday, which could account for some profit-taking by the infamous speculators who have been taking some amount of political flak from OPEC and U.S. energy analysts in recent months for stockpiling gasoline contracts on the bet they would increase in value over time.

Liquidation of gasoline length could be seen two ways: either the speculators were thinking of their bottom lines at the looming end of the year, or there was a genuine belief that the world economy and energy demand was on the verge of cooling down and now was the time to shed their holdings.

A sustained slump in crude and gasoline values would be welcome news to consumers who were robbed this year of the annual autumn slump in retail gas prices by continuing low inventories, a situation aggravated this year by Hurricane Ivan's destructive march through the Gulf of Mexico's offshore oil and natural-gas fields.

The situation has left consumers with a lingering case of sticker shock borne out Monday by the EIA's announcement that the national average retail gasoline price had climbed more than 4 cents since last Monday to $2.035 per gallon. California led the nation with a 7.5-cent jump to a breathtaking average of $2.402 per gallon.

The unhappy news wasn't lost on the political arena, where a spokesman for Democratic presidential nominee John Kerry blamed the Bush administration for the staggering price increases.

A few months ago, the idea of $50 oil prices seemed like a big deal, but now we're halfway to the $60 mark and gas prices are hitting $2 a gallon for the first time since June, Kerry spokesman Phil Singer said in a statement. These prices are hurting the economy and they're squeezing working families.

Retail diesel prices, which were aggravated by this month's run-up in the heating-oil market, were 8.8 cents higher this week at $2.180 per gallon nationwide, according to the EIA. The increase has been particularly tough on truckers who handle the vast majority of U.S. freight transport and for whom a fill-up can mean a purchase of 200 gallons of increasingly expensive fuel.

Basically, it's just passed on down to the consumer, David Rines, a terminal manager at Texoma Freight, told the Times Record in Wichita Falls, Tex. Everybody's prices are going up.

This ripple effect is exactly what OPEC concluded in its report was beginning to bog down the entire industrialized world's economy and would manifest itself as a drop in demand for fuel.

OPEC observed that the critical U.S. economy looked strong as it emerged from the summer months with higher consumer spending and construction activity as well as other bullish indicators. At the same time, the cartel's analysts were less enthusiastic about the coming months.

Forward-looking indicators suggest that 2005 will be a much more difficult year, the report stated. Factory orders fell in August and rising inventories confirm that production has caught up if not exceeded demand.

Asia's near-term prospects were equally suspect. OPEC concluded that both China and Japan expected to experience some degree of slowing -- particularly China, where OPEC saw the possibility of tighter monetary policy being instituted, which would increase the chances of the dreaded hard landing of the Chinese economy.

Market watchers will be keeping a close eye on NYMEX this week to see if the macroeconomic prognosticators and their visions of coming downturns hold sway or if the traders prefer the more concrete and immediate short-term guidance provided by the EIA and API statistics.

The result will give the public a better idea of whether or not the Kerry camp's warnings about $60 crude were meant merely to stir up the voters, or if they were a genuine prediction of things to come.

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