MercoPress. South Atlantic News Agency

Global uncertainty settles oil prices below 100 US dollars

Oil prices lost five US dollars ending Monday below 100 US dollars a barrel for the first time in six months, spurred by concerns about the global economy. With banking giant Lehman Brothers filing for bankruptcy protection, US light sweet crude closed Monday in New York at 95.71 and London Brent 92.38 US dollars a barrel.

News that Hurricane Ike had not damaged refineries as much as feared also contributed to the fall in prices. Concerns over the global impact of the banking sector financial health were deepened by the news that fellow investment bank Merrill Lynch had agreed to be bought by Bank of America. Merrill had been struggling with bad debts of more than 40 billion. Uncertainty about the future of insurance giant AIG, which requested Federal Reserve aid, also weighed on the market. Meanwhile it was announced that Oil ministers from the Organization of Petroleum Exporting Countries, OPEC, have agreed to curb their collective output by more than 500.000 barrels a day, a decision to be implemented in forty days time. An OPEC spokesman said members had agreed to cut excess production and "strictly comply" with a quota target of 28.8 million barrels per day. "Since the market is oversupplied the conference agreed to abide by September 2007 production allocations totalling 28.8 million barrels per day, levels with which member countries committed to strictly comply" according to the OPEC statement. Chakib Khelil, OPEC president and the Algerian energy minister said that quota in effect meant that member countries agreed to cut back 520.000 barrels a day in overproduction. The cutback is expected to take effect in about 40 days, Khelil added. OPEC identified a shift in sentiment in the oil market linked to falling economic growth, a strengthening dollar, easing geopolitical tensions and greater supply.