LONDON, Sept 26: Oil prices fell on Friday, reversing recent gains after hopes were dashed that the US Congress was about to pass a massive financial bailout package, dealers said.

New York’s main contract, light sweet crude for November delivery, fell $2.41 to $105.61 per barrel.

London’s Brent North Sea crude for November shed $2 to $102.60.

Fresh uncertainty emerged on Friday over whether the US bailout plan would receive Congressional approval, which helped to pull prices lower.

“The oil market is disappointed that talks failed and expects that demand for oil would decline as the US economy heads towards recession,” said Dresdner Kleinwort analyst Peter Fertig.

“Crude oil futures were down heavily on Friday as markets remained on edge as the US government’s $700bn bailout plan remained uncertain,” said Sucden analyst Michael Davies.

He added: “The news that Washington Mutual was shut down by the US authorities, in what is the US’s largest ever bank failure, also sent confidence reeling.” Oil prices had jumped by more than $2 on Thursday on signs the massive US government bailout was nearing approval, which would lessen the risk of an economic collapse of the world’s biggest energy consumer.

“Though it appears the plan will be watered down ... at the same time there are also many that feel that the plan will do nothing at all to solve the problems.

Oil prices have fallen heavily from $147 in July on worries that the global economy is slowing.

—AFP