Page last updated at 20:46 GMT, Monday, 19 April 2010 21:46 UK

Oil price drops fast as Goldman charges hit confidence

Oil being pumped in Bahrain

The oil price has dropped sharply for a second day as fraud charges filed in the US against Goldman Sachs bank on Friday shook investor confidence.

US light crude oil fell by $1.79 to settle at $81.45 a barrel. London Brent oil lost $1.76 to $84.23

The price of oil has now fallen by about $4 a barrel since Thursday.

Concerns about reduced fuel consumption by planes due to disruption caused by ash from the Icelandic volcano have also hit prices.

Planes across Northern Europe Europe were prevented from flying for a fifth day on Monday, though some services were set to resume on Tuesday.

"It is hard to calculate the total effect of the volcano-related shut down of air traffic, but the net effect is probably in the region of 0.5-1 million barrels a day less oil demand. This is a massive amount," said Torbjorn Kjus at DnB NOR Markets.

There was also a general feeling that the oil price had been over-inflated in recent weeks, analysts said.

"Markets got ahead of themselves with oil prices above $85, which was fundamentally not justified, so there are plenty of reasons to be rather cautious down the road," said Carsten Fritsch at Commerzbank.

The price of oil hit an 18-month high of more than $87 a barrel earlier this month.

On Friday, US financial regulator the Securities and Exchange Commission (SEC) charged banking giant Goldman Sachs of defrauding investors.

The claims concern Goldman's marketing of certain mortgage investments just as the US housing market faltered.

Goldman has rejected the SEC's allegations, saying that it would "vigorously" defend its reputation.



Print Sponsor


RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific