Oil

Oil slides below $90 on economic worry

Oil prices slumped below $90 a barrel on Tuesday amid rising worries that a global economic slowdown could slash energy demand.

U.S. crude fell $1.66 to $88.97 a barrel by 12:10 p.m. ET, after rising as high as $92.88 earlier on news Turkish troops had entered northern Iraq to fight Kurdish rebels. London Brent crude dove $1.84 to $89.45 a barrel.

The afternoon drop in oil prices came alongside a slide in equities as investors remained concerned the worst of the credit meltdown was still to come.

"The (oil) market was distracted earlier in the day by some pretty innocuous headlines regarding Turkey in Iraq. The real issue for oil is future growth of the world economy," said Bill O'Grady, an analyst at A.G. Edwards.

Oil had climbed as much as $2 earlier in the session on news that Turkish troops had crossed the border overnight to combat Kurdish militants sheltering in the semi-autonomous region in northern Iraq. The Iraqi Kurdish government said Turkish troops had since left.

Also supporting oil earlier in the day, workers at French oil and gas company Total voted to extend a work stoppage by another day at four of the five French refineries where they have been on strike since Monday over a pay dispute.

Worries about supplies as the Northern Hemisphere headed into winter had helped send U.S. crude to near $100 a barrel in late November. But later concerns of a possible glut, should there be a recession in top energy market the United States, have pulled prices back to $90.

In the shorter term, oil prices could rebound this week if weekly U.S. data show a fall in crude and distillates stocks, as forecast by analysts.

U.S. crude oil inventories probably fell for the fifth week in a row last week as fog hit import deliveries at the Houston Ship Channel, a preliminary Reuters poll of industry analysts showed on Monday.

U.S. crude stocks are already at their lowest level since March 2005, according to government data.

(Published by Reuters, December 18, 2007)