Oil falls below $94 a barrel

OIL prices closed at their lowest level in two weeks yesterday, tumbling below $94 a barrel on doubts that a revamped financial bailout plan will be enough to avoid a protracted economic slump and revive dwindling US energy demand.

The declines came a day after the US Senate overwhelmingly approved the rescue package.

Even if the plan wins further approval, oil market traders are sceptical that it will steady the teetering US economy and reverse flagging demand for energy in the world’s largest consumer.

The plan would remove billions of dollars in bad mortgages and other toxic debt from the books of banks and other financial firms, though critics argue it does not go far enough to help ordinary Americans struggling with soaring costs for food and fuel and falling home prices.

“I think the oil market believes that no size of a rescue plan is going to be enough to stave off a recession,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

He said government data released yesterday, showing a slowdown in US manufacturing and growing unemployment, suggest that a drop in US energy demand “is going to accelerate as we head into a steeper recession”.

Light, sweet crude for November delivery fell $4.56 to settle at $93.97 a barrel on the New York Mercantile Exchange.

It was crude’s lowest settlement since September 16. Prices earlier jumped as high as $100.37, but eased back later as traders digested the details of the revised bailout package.

Oil prices have fallen about $15, or 13%, in the past month as investor concerns about waning global energy consumption outweigh threats to supplies caused by Gulf Coast hurricanes and militant attacks in Nigeria.