Oil falls 3 percent on demand, recession concerns
NEW YORK (Reuters) - Oil fell more than 3 percent on Tuesday as concerns the global economy could slip into recession and drag down demand outweighed optimism over the bank bailout plans.
U.S. crude settled down $2.56 at $78.63 a barrel after hitting $84.83 earlier. London Brent crude settled down $2.93 at $74.53 a barrel.
Slumping demand in the United States and other big consuming nations and the mounting financial crisis have dragged crude off record peaks over $147 a barrel hit in July. Further pressure has come as investors sell oil for safer haven investments.
The United States announced plans to take equity stakes worth up to $250 billion in financial institutions after European powers agreed to recapitalize their banks on Monday.
The Dow Jones industrial average .DJI fell as fears the actions would not prevent the global economy from slipping into recession, after registering its biggest one-day point gain on Monday.
"People are worried about the economy right now, they are worried that demand is going to be down," said Mark Waggoner, president of Excel Futures.
"But I think we are still going to bounce back and two weeks from now, we may see (crude) prices off to the races again. For one thing, demand in China still continues to rise."
No. 2 oil consumer China saw September crude imports rise 10 percent from a year earlier, clocking a second month of double-digit growth, as the country's majors made a limited restock amid signs of weakening demand.
Producer group OPEC has called an emergency meeting for November 18 to discuss the crisis and its effects on oil markets, with some members calling for production levels to be reduced.
Analysts say the prospect of a global recession could force OPEC members to be more tolerant of cheaper oil, although the threat of swelling stocks could force an output cut by early next year.
Some support for prices came on news OPEC seaborne oil exports, excluding Angola and Ecuador, fell 600,000 barrels per day (bpd) in September, Lloyd's Marine Intelligence Unit (LMIU) said on Tuesday.
Oil traders also awaiting weekly U.S. inventory data on Thursday, with analysts forecasting a 1.9 million barrel build in crude stocks, a 600,000 barrel build in distillates, and a 2.9 million barrel rise in gasoline inventories.
(Reporting by Matthew Robinson in New York and Joe Brock in London; Editing by Marguerita Choy)
