Bailout deal fails to halt oil slide

Crude Price Falls Over $4 To $94 As Fuel Demand Seen Dipping

OIL prices fell more than $4 towards $94 a barrel on Thursday, as the US dollar rose and as the US Senate's approval of a $700 billion bailout of the financial sector failed to allay concerns over weakening fuel demand in the world's top energy consumer. 
    US light crude for November delivery fell $4.39 to $94.14 by 21:40 pm IST, erasing earlier gains above $100. It had settled $2.11 lower at $98.53 on Wednesday, when US government data showed supplies rising and as the dollar firmed. London Brent was down $4.33 at $91 a barrel. 
    The Senate's approval of the rescue plan initially reassured European stock markets, but US stocks fell sharply after weak US economic data. The dollar's advance to a near 13-month high against the euro and a basket of major currencies put pressure on oil, which is priced in dollars. 
    But oil's fall also reflected a shift in sentiment to focus more on falling demand in industrialised countries. "Expect crude to track firmer equity markets for a little while longer," said Edward Meir, of broker MF Global. 
    "On its own, we think crude will not fare as well, and will be particularly vulnerable heading into Q4," he said, adding "We would not be surprised to see $75-$80 on WTI (US crude) by the end of the year." 
    Latest US government data on jobless claims and factory orders provided more evidence of an economic slowdown. The number of US workers filing new claims for jobless benefits rose to their highest in seven years in the week to September 27, but this was partly due to the impact of Hurricanes Ike and Gustav. 
    Oil prices have tumbled from record highs above $147 a barrel on July 11 on signs of slowing oil demand from industrial economies. US government data on Wednesday showed crude oil inventories up 4.3 million barrels last week as output from the Gulf of Mexico continued to recover from disruptions caused by Hurricane Ike. 
    Gasoline inventories also showed a surprise 900,000-barrel rise as more refinery capacity came back online following the storm, which caused the worst disruption to the US energy sector since the 2005 hurricane season. 
    Total US oil product demand over the past four weeks was down 7.1% from a year earlier, providing evidence of the impact of the financial crisis and high fuel costs on US consumption. 
    Oil prices have also come under pressure from investors shifting money out of commodities into safe haven investments such as cash and government bonds because of the financial sector crisis.