Oil Falls Over 4 percent on Economic, Demand Concerns

Oil dropped more than 4 percent on Thursday as financial market turmoil stoked concerns about fuel demand and sent investors seeking safer havens.

U.S. crude settled down $4.56 at $93.97, while London Brent fell $4.77 to settle at $90.56 a barrel.

Shockwaves from the global credit crisis spread, threatening industry and jobs worldwide and pressuring the U.S. Congress to finish up a $700 billion bailout of the U.S. financial sector.

The growing financial crisis has added to concerns about oil demand, which has slumped in industrialized countries like this United States this year, sending crude prices crashing from record highs over $147 a barrel hit in July.

U.S. stocks plunged as reports on unemployment claims and factory orders added to worries about the economy of the world's top energy consumer.

Additional pressure on crude prices came as investors -- who had flocked to crude and other commodities earlier this year as a hedge against the weak dollar and inflation -- unwound positions.

Dollar gains against the euro and other currencies also helped push down crude. U.S. government data showing rising inventories of crude, gasoline and natural gas as oil infrastructure recovered from Hurricane Ike, also weighed on prices.

TradingEconomics.com, Reuters.com
10/2/2008 1:33:34 PM