OIL PRICES dropped another 4 per cent yesterday, extending their steepest two-day slide since 2004 as mounting economic turmoil sent investors fleeing to safer havens.
The losses came despite US supply disruptions after hurricane Ike crashed through the Gulf of Mexico last week and left a quarter of the nation's energy output idle. "People are getting out of commodities and getting into safer havens, like bonds," said Andy Lebow, a broker at MF Global in New York.
US crude for October traded down $4.86 to $90.85 a barrel late yesterday afternoon, adding to losses of more than $5 on Monday. Prices have dropped more than 10 per cent in two days, the biggest slide since December 2004. Brent crude fell $5.01 to $89.23 a barrel.
"If the economic turmoil continues, demand will continue to drop," said Jonathan Kornafel, Asia director at US-based options trader Hudson Capital Energy.
"It's a bit of panic in the markets." Slowing demand in the US and other top nations has sent crude prices tumbling from record highs of over $147 a barrel in July.
The drop in oil prices came on the back of new figures which showed US consumer prices dipped in August for the first monthly drop in nearly two years.
On a year-on-year basis, the US consumer price index rose 5.4 per cent, a moderation from the 5.6 per cent year-over-year rise in July, which was the highest since January 1991.
There were signs that consumers were growing cautious about spending in the face of higher prices for many goods and increasing turmoil in financial and housing markets. US chain store sales slid 1.1 per cent in September so far compared with August, although they were 1.4 per cent higher in the week ended September 13th from the comparable week a year earlier. - (Reuters)
