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SINGAPORE: Crude oil prices remained below US$90 a barrel in Asia Tuesday as deepening global financial turmoil and plunging stock markets further raised fears of slowing energy demand, dealers said.
New York's main contract, light sweet crude for November delivery, rose US$1.08 to US$88.89 after a plunge of US$6.07 to US$87.81 at the close of floor trading on Monday at the New York Mercantile Exchange.
Brent North Sea crude for delivery in November rose 65 cents to US$84.33 from a fall of US$6.57 to US$83.68 Monday in London.
"Today some correction can be seen," said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage in Tokyo.
He said the benchmark New York oil contract was moving in line with the Dow Jones Industrial Average, which fell as much as 800 points during Monday's session but regained some ground very late in the day.
Some short covering also helped boost oil prices, he said. Short covering occurs when traders, who have sold more than they own in hopes that prices will fall, buy up the contracts as the market starts turning higher.
Oil futures contracts skidded along with global stock markets after a US$700-billion US government financial rescue package failed to calm investor nerves about frozen global credit flows, dealers said.
World oil prices first broke through the US$100 level at the start of the year and touched record highs above US$147 in July.
But they have fallen sharply since then on accelerating concerns that demand is slowing as a result of the global financial turmoil.
While a short-term recovery could see New York crude futures bouncing back to US$95, Hasegawa said the mood remains bearish and the price could fall to US$75 before year's end.
"Oil is not the best hedge against a market meltdown and China and India (demand) will slow," said Phil Flynn at Alaron Trading.
"The contagion is spreading. China will not be importing gasoline in October, for the second successive month as domestic stockpiles mount," said John Kilduff at MF Global.
China and other major emerging economies are key drivers of global energy demand, which is waning under pressure from the worldwide financial crisis that began 14 months ago with a slump in the US housing sector.
Hasegawa said investor funds that are flowing out of commodities have also pulled prices down.
- AFP/yb
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