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NEW YORK: Oil prices fell under the 70 dollar a barrel level on Monday after a stock market plunge in China sent jitters across world markets about prospects for global economic recovery.
New York's main futures contract, light sweet crude for October delivery, closed at 69.96 dollars, down 2.78 dollars from Friday's closing price.
London's Brent North Sea crude for delivery in October lost 3.14 dollars to settle at 69.65 dollars.
With the London market closed due to a bank holiday, action was focused on New York after trades wound up in Asia, where prices remained bearish.
Markets were concerned over the sharpness of the fall in the Shanghai stock market, traders and analysts said.
Shares in the Shanghai exchange dived 6.74 percent - its biggest loss in 14 months - after state media said new loans in China may fall below 300 billion yuan (43.9 billion dollars) in August, from 355.9 billion in July and 1.53 trillion yuan in June.
The slowdown in lending, some feared, may derail recovery in China, which has been driving rapid economic growth, and impact demand for oil.
"The problem is the Asian stock market found its way into oil prices," said Deutsche Bank oil analyst Adam Siemenski.
"When the stock market is faltering, it's usually because there are some fears there is going to be a problem in the economic performance, that gets reflected in people's assessment of how much demand is going to be," he said.
The market has been anticipating higher oil demand in Asia, which many feel could drive global economic recovery from the worst recession in decades.
The stocks plunge in China struck "a blow deep into the heart of expected oil demand growth," said Phil Flynn of PFG Best Research.
"Despite the winning ways of the US stock market, oil traders are increasingly focused on Asia which has had a rough go as of late," he said. "The market is concerned whether or not the Chinese government can engineer a soft landing."
US shares have been mostly rising in recent weeks on hopes that the recession in the world's largest economy is easing, with growth anticipated in the third quarter of the year after four consecutive quarterly contractions.
Crude oil prices see-sawed last week, hitting 75 dollars for the first time in 10 months on Tuesday before falling sharply.
On Thursday prices briefly dipped below 70 dollars then bounced back.
In the United States, the world's largest energy-consuming nation, official data showed spending rose for the third consecutive month, albeit largely due to federal aid. - AFP/de
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