Oil tumbles under 93 dollars

Published September 15, 2008

LONDON Oil prices plunged on Monday to seven-month lows below 93 dollars on prospects of weaker energy demand amid a worsening global financial crisis after Lehman Brothers bankruptcy, analysts said.

 

In London, Brent North Sea crude for delivery in October tumbled 4.81 dollars to 92.77 dollars a barrel -- the lowest level since February.

New Yorks main contract, light sweet crude for October, dived 5.26 dollars to 95.82 dollars a barrel.

'Turmoil in the financial markets hurt sentiment and reinforced concerns about weaker oil demand growth,' said Sucden analyst Michael Davies in London.

Oil prices were also weighed down by news that damage to US oil platforms caused by Hurricane Ike had not been as bad as feared, analysts said.

US officials said that Ike, which slammed the US Gulf Coast on Saturday, had damaged about 10 oil platforms in the Gulf of Mexico where major energy installations are located.

'The initial perception is that there hasnt been much structural damage to oil and refinery infrastructure,' said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.

Crude prices are down by more than a third in value from record levels of above 147 dollars reached in July, as investors grow increasingly pessimistic about weakening energy demand amid signs the global economy is slowing down.

Fuelling investors concerns was the announcement Monday that Lehman Brothers would file for bankruptcy after the investment bank, in desperate need of capital injection, failed to find a buyer.

Global stock markets plunged between three and seven percent Monday on concerns over the beleaguered world economy.

The European Central Bank and Bank of England responded to the latest gloom by pumping billions of dollars into world financial markets.

A series of reports underlining weakening demand were published last week. The US Department of Energy lowered its forecasts for 2009 global crude oil demand and the International Energy Agency cut its estimate for demand growth this year by 100,000 barrels per day and for 2009 by 140,000 bpd.

The market meanwhile overlooked news that militants had on Monday attacked a Shell facility in Nigerias restive southern Delta region, a day after an armed group declared an 'oil war.'

The most prominent armed group in the region, MEND, which had declared the war, immediately said it was responsible for the attack in Rivers State, claiming to have destroyed the Anglo-Dutch groups Alakiri station.

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