Page last updated at 21:03 GMT, Tuesday, 16 September 2008 22:03 UK

Oil falls amid economic concerns

Worker at Zubair Moshrif oil field in Iraq (3 July 2008)
Oil prices are down sharply from highs above $147 seen in July

Oil prices have fallen further amid concerns that a slowdown in the global economy will dent demand.

US light, sweet crude fell $4.56 to settle at $91.15 a barrel in New York while Brent crude was down $5.02 to settle at $89.22 in London.

Oil prices fell $5 a barrel on Monday as global stock markets sank and news emerged that US refineries had not been damaged as expected by Hurricane Ike.

The oil price has fallen from highs of above $147 a barrel in July.

"If the economic turmoil continues, demand will continue to drop," said Jonathan Kornafel, of options trader Hudson Capital Energy.

"It's a bit of panic in the markets," he added.

Market worries

Oil prices continued to fall despite reports of an attack on a Royal Dutch Shell pipeline in Nigeria.

A key market concern on Tuesday was the future of insurance giant AIG, which some feared could be the next financial giant to fold.

"AIG has more to do with the oil price right now than the Saudis do," said Larry Grace, an analyst with Kim Eng Securities.

If more firms go bust, there are fears that gaining credit will be even harder, hitting both large firms and individuals.

If this happens then consumers are likely to seek ways to tighten their belts more, such as reducing their petrol consumption.

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