Oil slips to $90 per barrel, at 8-month low

Font Size

Print

Feedback

Email

Discuss

Related Articles

Oil trades below $70 per barrelOil rises above USD 70 per barrelOil spikes past USD 72 per barrelOil dips near USD 68 per barrel

Singapore, October 6:: Oil prices tumbled nearly 4 per cent amid a commodities-wide rout on Monday, falling to their lowest since February as traders feared efforts to contain a growing credit crisis would fail to stave off a sharper decline in oil demand.

After Friday's passage of a landmark US $700 billion bailout bill seemed to quell, for now, weeks of US-centred turmoil, the focus shifted to Europe where officials scrambled at the weekend to save three banks and offered different ways to soothe the frayed nerves of investors and savers.

US light crude for November delivery tumbled $3.39 a barrel or 3.6 per cent to $90.49 by 0711 GMT, a fourth day of losses that deepened last week's 12 per cent slump, the market's biggest such loss in almost four years. Earlier in the day, it fell 3.8 per cent to as low as $90.27.

London Brent crude dropped $3.25 to $87.00 a barrel.

"There's a growing perception that the bailout package will put a further drag on US growth, and that really this is just a Band-Aid initiative to bail out Wall Street," said Mark Pervan, senior commodities analyst at ANZ.

The US dollar's rise to a 13-month high versus the euro added to pressure on beleaguered commodities, which slumped more than 10 per cent last week in their biggest-ever weekly loss. Asian stocks tumbled by around 5 per cent on Monday.

Oil demand in the world's top consumer has already slumped this year under the weight of record prices, while consumption in Japan and Europe has also weakened, knocking crude off a record peak over $147 a barrel struck in July.

Traders may begin to fear next for China, whose rapid growth helped trigger oil's rise from just $20 a barrel in 2002.

"I think the market's starting to build this into prices," said Pervan. "You would expect the market is now joining the dots and thinking ... this will probably flow through to China."

Though the United States bought breathing room in the credit crisis with a series of takeovers and bailouts, Europe fought at the weekend to contain the fallout.

Germany said it would guarantee more than 500 billion euros ($693 billion) in private deposit accounts to protect savers from the worst financial crisis since the 1930s. Austria and Denmark quickly followed suit.