Oil Slides Towards $89

Oil fell more than a dollar towards $89 a barrel on Monday as falling global stock markets amid renewed worries about the health of the global economy spurred profit taking.
TradingEconomics.com, Bloomberg 1/28/2008 6:24:27 AM

Expectations that OPEC is unlikely to agree to boost supply when ministers meet later this week prevented deeper losses.

U.S. light, sweet crude for March delivery slid $1.06 to $89.65 a barrel by 1220 GMT, off lows of $89.18. Prices gained 14 cents last week after clawing back from a six-week low of $86.11 a barrel.

Brent crude in London was down 84 cents at $90.06 a barrel, and, like in the early part of 2007, was trading at a small premium to U.S. crude, the market benchmark.

After falling sharply early last week, as growing despair over the U.S. economy rattled global equity markets, oil bounced back from Thursday as U.S. legislators and the White House hammered out a $150 billion stimulus plan.

But with prices lately moving in sync with stock markets, traders began to fear that Friday's $1.30 surge might have been overdone after Wall Street ended the week on a weak note following two days of sharp gains. .N

Worries over the health of the U.S. economy, and with it the global economy, hit shares across Asia and Europe on Monday.

While many analysts say the risk of an economic slowdown could still take some steam out of oil prices that are not far off their record high of $100.09, a thirst for alternative investments and OPEC's resolve have limited the downside so far.