Update: Oil price falls briefly below $90/barrel

Update: Oil price falls briefly below $90/barrel

Singapore: The benchmark New York oil futures contract briefly fell below $90 a barrel Monday in Asia after Wall Street’s financial meltdown extended to Europe, triggering fears of a global slowdown, dealers said.

In late afternoon New York’s main contract, light sweet crude for November delivery, hit a low of $89.96 before rebounding to trade $3.43 lower at $90.45.

London’s Brent North Sea crude for delivery in November had already dropped below the 90-dollar mark, on 16 September.

The Brent contract traded $3.70 lower at $86.55 in late Asian trade on Monday.

World oil prices first broke through the $100 level at the start of the year and touched record highs above $147 in July. But they have fallen sharply since then on concerns that demand is slowing during the global financial crisis, dealers say.

“I think it’s just sort of continuing the steepening gloom you are seeing," said Jason Feer, vice president of energy market analysts Argus Media in Singapore.

He said that in the absence of weather or political factors to influence oil prices, investors “are concerned about the economic issues."

On Sunday, BNP Paribas announced it is taking control of ailing finance group Fortis’ operations in Belgium and Luxembourg, in a deal that will make Belgium the largest shareholder in the French bank.

Germany also sealed a public-private rescue plan for the country’s fourth biggest bank Hypo Real Estate as the government extended a blanket guarantee for all personal bank deposits to avert panic withdrawals.

The announcements came on the eve of a meeting of European finance ministers in Luxembourg. They will seek to flesh out broad plans for restoring confidence in the crisis-struck banking system, agreed to over the weekend by Europe’s biggest economic powers.

“The risks of a severe international economic slowdown, possibly extending to a recession in some developed economies, have increased as a result of the recent strains in the international financial system," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney.

“If there is a severe downturn in the international economy, oil prices could prove weaker than forecast," he said.

French leaders on Friday scrambled to reassure consumers, voters and investors after the official statistics agency warned that the eurozone’s second largest economy had slipped into recession.

CFC Seymour securities said from Hong Kong on Monday that recent data from the US and elsewhere “highlight the fact that the financial crisis is turning into an economic one, and the process is so advanced that the bailout will not reverse it."

The comment referred to a bailout package that will see the US government buy up to $700 billion US worth of tainted mortgage-related assets at the root of the global crisis.