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Oil drops to $81 as risk aversion grows, flights cut - Daily News Egypt

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Oil drops to $81 as risk aversion grows, flights cut

LONDON: Oil fell to around $81 a barrel on Monday and touched a three-week low as the fraud charges filed against Goldman Sachs dampened risk appetite and European flying restrictions curbed jet fuel use. The drop extended the previous session s fall of 2.7 percent, the largest percentage loss since Feb. 5. European shares fell …


LONDON: Oil fell to around $81 a barrel on Monday and touched a three-week low as the fraud charges filed against Goldman Sachs dampened risk appetite and European flying restrictions curbed jet fuel use.

The drop extended the previous session s fall of 2.7 percent, the largest percentage loss since Feb. 5. European shares fell and US stocks opened slightly lower, while tepid risk appetite prompted the dollar index to rise 0.4 percent.

It s a continuation of what we saw on Friday – position squaring, investors locking in profits after the news we got about Goldman Sachs, weaker US consumer confidence, falling equity markets and rising risk aversion, said Carsten Fritsch, analyst at Commerzbank.

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 now.

US crude for May delivery fell $2.00 to $81.24 by 1335 GMT after falling as low as $80.53 – the lowest intraday price since March 29. Brent crude for June fell $1.97 to $84.02.

Goldman was charged by the US Securities and Exchange Commission (SEC) over its marketing of a subprime mortgage product. A survey on Friday showed US consumer sentiment took a surprise negative turn in early April.

The bank saw pressure building on both sides of the Atlantic on Sunday, with Germany and Britain saying they would seek details from the SEC about Goldman s activities as a prelude to potential legal steps.

Analysts also pointed to the disruption of flights in Europe as adding further pressure to oil. About 1.18 million barrels per day (bpd) of jet is normally used for jet transport in Europe, according to JBC Energy estimates.

Only about 30 percent of the normal number of flights will operate in Europe on Monday because of the spread of volcanic ash from Iceland, the European aviation control agency Eurocontrol said.

Oil had risen strongly in recent weeks, hitting an 18-month high of above $87 earlier this month as robust economic data buoyed hopes of a demand recovery. -Additional reporting by Fayen Wong in Perth

Topics: FJP

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