Crude oil trades lower after biggest one-day gain
Wednesday, 24 September 2008
SINGAPORE, Sept 23 (AFP): Crude oil traded lower in Asia today after the benchmark New York futures contract soared more than 16 dollars for its biggest one-day gain ever.
The massive price surge stemmed partly from hopes that a US plan to buy tainted mortgage-related assets will save the global economy from collapse, dealers said.
In afternoon trade, New York's main contract, light sweet crude for November delivery, was down 27 cents to 109.10 dollars a barrel.
The contract for October delivery had soared 16.37 dollars a barrel to 120.92 dollars at the close of floor trading on the New York Mercantile Exchange Monday.
The rally was partly driven by technical factors linked to the October contract's expiration at the close of trade, analysts said.
Monday's surge exceeded the last record one-day rise of 10.75 dollars on June 6.
Brent North Sea crude for November delivery was 15 cents lower at 105.89 dollars a barrel after rising 6.43 dollars a barrel Monday in London.
Oil prices had fallen heavily from record levels above 147 dollars in early July, on worries the global economy is slowing and causing a dent in energy demand.
Oil prices late last week got a boost from news of a massive US plan to bail out the sinking financial sector following the collapse of investment bank Lehman Brothers and the government's loan to insurance giant AIG.
Analysts said the 700 billion-dollar rescue package, which has to be approved by Congress, has eased fears that the world's largest economy was on the brink of collapse, but is unlikely to prevent the unfolding global economic slump.
"Europe and Japan are still on the brink of recession," said Shane Oliver, chief economist of AMP Capital Investors in Australia. He added that the United States is also likely to fall into a recession.
While the US bailout plan removes the risk of a financial meltdown, "the solution does little to prevent further economic deterioration over the year ahead," he said.
The massive price surge stemmed partly from hopes that a US plan to buy tainted mortgage-related assets will save the global economy from collapse, dealers said.
In afternoon trade, New York's main contract, light sweet crude for November delivery, was down 27 cents to 109.10 dollars a barrel.
The contract for October delivery had soared 16.37 dollars a barrel to 120.92 dollars at the close of floor trading on the New York Mercantile Exchange Monday.
The rally was partly driven by technical factors linked to the October contract's expiration at the close of trade, analysts said.
Monday's surge exceeded the last record one-day rise of 10.75 dollars on June 6.
Brent North Sea crude for November delivery was 15 cents lower at 105.89 dollars a barrel after rising 6.43 dollars a barrel Monday in London.
Oil prices had fallen heavily from record levels above 147 dollars in early July, on worries the global economy is slowing and causing a dent in energy demand.
Oil prices late last week got a boost from news of a massive US plan to bail out the sinking financial sector following the collapse of investment bank Lehman Brothers and the government's loan to insurance giant AIG.
Analysts said the 700 billion-dollar rescue package, which has to be approved by Congress, has eased fears that the world's largest economy was on the brink of collapse, but is unlikely to prevent the unfolding global economic slump.
"Europe and Japan are still on the brink of recession," said Shane Oliver, chief economist of AMP Capital Investors in Australia. He added that the United States is also likely to fall into a recession.
While the US bailout plan removes the risk of a financial meltdown, "the solution does little to prevent further economic deterioration over the year ahead," he said.