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Oil plummets below $83 on global slowdown fears
(Agencies)
Updated: 2008-10-10 21:03 LONDON - Oil prices plummeted to a one-year low below $83 a barrel Friday in European trading as investor fears of a severe global economic downturn caused by the crisis in credit markets sparked a panicked sell-off of both crude and equities.
Light, sweet crude for November delivery was down $3.85 to $82.74 a barrel in electronic trading on the New York Mercantile Exchange by midmorning in Europe, the lowest since October 2007. The contract fell $1.81 overnight to settle at $86.62. "The whole market has lost confidence in everything," said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne. "Everyone is worried about global growth, and oil is the front line commodity for that. There's just a lot of panic and fear in the market." Investors have been unimpressed by interest rate cuts by the US and other leading central banks this week to help unclog the credit markets and promote lending. A credit crisis that began last year in US sub-prime mortgages has spread across the globe, forcing governments to spend hundreds of billions of dollars to bail out banks, brokerages and insurance companies, and fears are growing it will sink the wider economy. All European stock markets were deep in the red, following sharp losses in Asia and the US Britain's FTSE 100 was down 5.3 percent, while Germany's DAX was 7.9 percent lower. The Dow Jones industrial average closed down 7.3 percent to fall below the 9,000 mark for the first time since 2003 as Japan's Nikkei 225 plunged 9.6 percent. "The problem is no one really knows how far and deep this will go," Pervan said. "But we can see from the size of the rescue packages, this is a really serious deal. This isn't a normal bear market." |
