Crude falls $4/bbl to new 7-month low on US crisis

16 September 2008 08:43  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude futures plummeted on Tuesday, falling more than $4/bbl and driving prices to new seven-month lows amid continued turmoil on the financial markets and growing concerns over the longer term impact on the global economy and the demand for energy.

  

At 07:05 GMT, October NYMEX light sweet crude futures were trading at a session low of $91.54/bbl, down $4.17/bbl on Monday’s settlement level.

 

At the same time, November Brent on London’s futures was trading at $90.22/bbl, down $4.02/bbl on Monday’s settlement price, having earlier fallen to a low of $89.80/bbl down $4.44/bbl.

 

Funds have exited the oil markets in search of perceived safer investments such as gold amid ongoing instability in the financial markets following the collapse of Lehman Brothers in the US and mounting pressure on the country’s AIG, which was until recently the world’s largest insurer.

 

Attention is focussed on the US Federal Reserve which is due to make an announcement on interest rates later on Tuesday. Analysts expected interest rates to be left unchanged although there was the possibility of a downward adjustment following market instability on Monday.

 

Meanwhile, a sizeable number of oil and gas facilities in the US Gulf region remained shut down following the passage of Hurricane Ike. Although damage was reported to some installations, the scale was not as great as had been feared.

 

Elsewhere militants in Nigeria launched further attacks on oil installations including a Shell pipeline and an oilfield operated by Chevron. This follows a declaration over the weekend by militants of an "oil war" in the Niger Delta and a warning to oil workers to leave the region. 

 

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By: James Dennis
+65 6780 4359

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