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Oil plunges to $92 in Asia on US credit fears

(Agencies)
Updated: 2008-09-16 20:04

VIENNA, Austria -- Oil prices plummeted Tuesday, falling briefly below $92 a barrel and reflecting market fears that the US credit crisis which brought down brokerage giant Lehman Brothers will drag on global economic growth and restrain demand for crude.

Shell's oil and gas terminal on Bonny Island in the Niger Delta. A Nigerian rebel group says it had blown up and destroyed a Royal Dutch Shell pipeline in the latest attack in its "oil war" on western firms. [Agencies]

OPEC's production cut of 520,000 barrels a day earlier this month has failed to stem the decline. The 13-nation group said oil demand in the US fell by 800,000 barrels a day last month due to the slow economy and high retail prices.

And in its monthly report, it said that overall less additional oil was needed on the market, noting that -- although the world's appetite for crude grew by an additional 900,000 barrels a day this year, that was 100,000 barrels less than what was estimated before the onset of the world's economic malaise.

For next year, the report predicted that world demand will grow by 900,000 barrels a day, to a daily 87.7 million barrels.

Light, sweet crude for October delivery tumbled $3.02 to $92.69 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. It briefly fell as low as $91.54. Overnight, the contract dropped $5.47 to settle at $95.71, the first time oil closed below $100 since March 4.

In a stunning turn of events Monday on Wall Street, Lehman Brothers Holdings Inc., a 158-year-old investment bank, filed for bankruptcy after failing to find a buyer and Merrill Lynch & Co. agreed to be bought out by Bank of America Corp.

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