Oil prices slip below USD 81 on renewed economic concerns

Oil prices slipped lower Monday in Asia on renewed concerns an impending economic slowdown could dent demand for crude and petroleum products.

Photo: Oil prices slip below USD 81 on renewed economic concerns

Oil prices slip below USD 81 on renewed economic concerns

Light, sweet crude for November delivery fell 39 cents to US$80.83 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract fell 22 cents to settle at US$81.22 a barrel Friday in New York.

The global credit squeeze is a "serious crisis" that is not over yet and is "going to have an impact on growth," IMF's outgoing head Rodrigo Rato said in a Financial Times interview published Monday. It could be "a few months, probably into next year" before financial markets recover, he said in remarks about the aftermath of the subprime mortgage crisis in the U.S.

"The U.S. is going to slow down ... Growth in Europe looks less strong than before, and in Japan too - though Japan will probably stay (at about) potential," Rato said.

Former Federal Reserve Chairman Alan Greenspan told CNN Sunday that the rate of US economic growth was slowing although the odds of a recession are less than 50 per cent as financial markets were beginning to go back to normal.

Oil prices have been volatile in recent days as investors have debated whether demand for oil and petroleum products will be strong enough in the fourth quarter to support crude oil at US$80 a barrel. Some argue declines in refinery activity and heating oil inventories suggest supplies of heating and crude oil will be tight when heating season demand begins to grow.

At the end of the third quarter, many U.S. refineries shut down for maintenance and regear their operations to turn out more home heating oil for the Northern Hemisphere winter. The refineries could start returning to production as early as this month and that ramp-up could increase demand for crude oil.

Traders say oil prices should find strong support at US$79 as participants view that as a good buying opportunity.

November Brent crude fell 26 cents to US$78.64 a barrel on the ICE futures exchange in London.

Heating oil futures lost 0.70 cent to US$2.2165 a gallon (3.8 liters) while gasoline prices slipped 0.58 cent to US$2.0435 a gallon. Natural gas futures fell 8.9 cents to US$6.984 per 1,000 cubic feet.