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viewBrent Crude Oil

Oil slides on demand fears

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Oil prices slid more than US$4 per barrel this afternoon as fears that the global economy may be headed for a double dip recession intensified following downbeat comments from the Federal Reserve and downgrades of major US banks.

Following its two-day policy meeting, the Fed as expected unveiled a US$400 billion “operation twist”, or selling short term securities to push long term interest rates lower, while also giving a downbeat assessment of economic conditions. Fed chairman Ben Bernanke warned there was a significant risk for the economy going forward.

Moody’s added to economic gloom, announcing downgrades of three major banks, Citi (NYSE:C), Wells Fargo (NYSE:WFG) and Bank of America (NYSE:BAC).

Likewise, today’s employment report from the Labor Department gave the markets little to cheer above, showing a smaller than expected decline in jobless claims, which fell 9,000 to 423,000 last week.

Traders fear that the Fed’s action will fall short of stabilising the economy and turn away another wave of global financial crisis, which would reduce energy demand and weaken commodity prices.

London Brent did slightly better than US benchmark crude today, owing to supply concerns that supplies from the North Sea may be disrupted.

Reuters reported yesterday that most of September’s shipments of North Sea Forties crude, the main component of the Brent benchmark, will be delayed as a result of lower than expected production from Nexen’s (NYSE:NXY) Buzzard field in the North Sea.

US light, sweet crude, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), fell US$4.52 to US$81.40/barrel in morning trade in New York.

November Brent crude dipped US$3.98 to US$105.14/barrel on London’s ICE Exchange this afternoon.

Today’s top risers in the oil and gas sector were:

Petro Matad (LON:MATD), up 9.5 percent at 40 pence at midday

Leed Petroleum (LON:LDP), up 8.5 percent at 0.13 pence

TXO (LON:TXO), up 3 percent at 0.7 pence

Caspian Holdings (LON:CSH), up 2.5 percent at 0.277 pence

Petrel Resources (LON:PET), up 2.5 percent at 8.06 pence

The top fallers were:

Roxi Petroleum (LON:RXP), down 14 percent at 3.01 pence at midday

Matra Petroleum (LON:MTA), down 10 percent at 1.12 pence

Nighthawk Energy (LON:HAWK), down 9 percent at 3.82 pence

Green Dragon Gas (LON:GDG), down 8.5 percent at 7.75 pence

Gasol (LON:GAS)
, down 7 percent at 0.627 pence

Quick facts: Brent Crude Oil

Price: - -

LSE:BRENT
Market: LSE
Market Cap: -
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