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03.10.2008 Business & Finance

Oil Falls Below $97

Crude oil prices fell by more than $2.00 to below $97 a barrel yesterday after the U.S. Senate's approval of a $700-billion bailout of the financial industry failed to allay concerns over weakening demand and growing supplies in the country.

U.S. light crude for November delivery fell $1.54 cents to $96.99 by 0737 GMT, off an earlier low of $96.50 and erasing earlier gains above $100 before the vote.

London Brent was down $1.48 at $93.85, off an earlier low of $93.24.

The package for Wall Street, which has yet to be approved by the House of Representatives, rekindled hopes that the credit crisis could be eased, but traders and analysts said the supportive effect would be limited as eyes remained on falling demand.

"Once the bill is finally approved, I would expect crude oil to sell off. In the short term, I would look for us to head for the low $90s," said Jonathan Kornafel, Asia Director, Hudson Capital Energy Singapore.

Oil prices tumbled from record highs above $147 a barrel in July on signs of slowing oil demand from industrial economies.

Pressure has also come as investors sell oil and other commodities and move cash into safer investments amid turmoil in financial markets.

U.S. government data on Wednesday showed crude oil inventories up 4.3 million barrels last week as output from the Gulf of Mexico continued to recover from disruptions caused by Hurricane Ike. — Reuters