By Stevenson Jacobs, AP
NEW YORK — Oil prices tumbled more than US$6 a barrel Monday, briefly slipping below the US$100 level as traders bet that global demand for petroleum products will keep falling despite a planned US$700 billion U.S. financial bailout.
A stronger dollar also weighed on crude prices as investors who bought oil and other commodities as a hedge against inflation sold their contracts.
Light, sweet crude for November delivery fell as low as US$99.80 a barrel in morning trading on the New York Mercantile Exchange before edging up slightly to US$100.28, down US$6.61. In London, November Brent crude fell US$5.73 to US$97.81 a barrel on the ICE Futures exchange.
The contract fell Friday US$1.13 to settle at US$106.89. Crude has now fallen 31 percent since surging to an all-time record of US$147.27 on July 11.
Monday’s sell-off was tied to anxiety over the pending U.S. rescue plan. Following a week of intense negotiations, lawmakers could hold a final vote on the emergency measure Wednesday. But investors are doubtful whether the plan will be enough to unfreeze global credit markets and restore calm to the financial system.
Global credit markets remain extremely tight, crippling companies’ ability to raise capital and cover basic costs like payroll. If the economy weakens further, consumers and businesses around the globe would likely cut back on energy use even more, analysts say.
“The market is clearly questioning whether the bailout will be enough to prevent a stronger economic downturn. That obviously has potentially negative implications for oil demand growth,” said Michael Wittner, global head of oil research at Societe Generale in London.