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LONDON: Crude oil prices slumped to eight-month low points of below 90 dollars a barrel on Monday as worsening financial turmoil triggered fears about slowing demand for energy, traders said.
Brent North Sea crude for delivery in November tumbled 3.89 dollars to 86.36 dollars a barrel in electronic deals.
New York's main contract, light sweet crude for November, shed 4.13 dollars to 89.75 dollars a barrel.
"A feature of ongoing tensions in the financial sector and increased concerns over the real economy impact is yet further sharp falls in the oil price," said Nick Matthews, an analyst at Barclays Capital in London.
Oil prices first broke through the 100-dollar level at the start of the year and touched record highs above 147 dollars in July. But they have since fallen sharply on concerns that demand is slowing during the global financial crisis.
"I think it's just sort of continuing the steepening gloom you are seeing," said Jason Feer, vice president of energy market analysts Argus Media in Singapore.
He said that in the absence of weather or political factors to influence oil prices, investors "are concerned about the economic issues."
On Sunday, BNP Paribas announced it was taking control of ailing finance group Fortis' operations in Belgium and Luxembourg, in a deal that would make Belgium the largest shareholder in the French bank.
Germany also sealed a public-private rescue plan for the country's fourth biggest bank Hypo Real Estate as the government extended a blanket guarantee for all personal bank deposits to avert panic withdrawals.
The announcements came on the eve of a meeting of European finance ministers in Luxembourg. They were Monday due to flesh out broad plans for restoring confidence in the crisis-struck banking system, agreed to over the weekend by Europe's biggest economic powers.
"The risks of a severe international economic slowdown, possibly extending to a recession in some developed economies, have increased as a result of the recent strains in the international financial system," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney.
"If there is a severe downturn in the international economy, oil prices could prove weaker than forecast," he said.
- AFP/ir
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