Bangkok: Oil prices sank below USD 76 a barrel Friday in Asia as investors curtailed their risky bets on commodities amid uncertainty about the global fallout from Dubai's financial troubles.
Benchmark crude for January delivery was down USD 2.09 to USD 75.87 at midday Bangkok time in electronic trading on the New York Mercantile Exchange, extending losses from European trade. Trading in the US was closed Thursday for the Thanksgiving holiday.
Just a year after the global downturn derailed Dubai's explosive growth, the emirate is now so swamped in debt that it's asking for a six-month reprieve on paying its bills. Its main development engine, Dubai World, has said it would ask creditors for a "standstill" on paying back its USD 60 billion debt until at least May, news that roiled markets worldwide.
"The main factor in the fall seems to be the events in Dubai," said Nick Raffan, head of mining and resources research at consultancy Fat Prophets in Sydney. "People are suddenly re-evaluating their risk appetite."
After zooming to USD 147 a barrel in July 2008 and crashing to USD 32 in December, oil prices have meandered in the high USD 70s for more than a month as investors weigh a slow US recovery against surging Asian demand.
Raffan said oil's losses Friday were driven by increased wariness about investment in riskier assets such as stocks and commodities rather than new information about actual demand for oil.
However, recent figures on durable goods orders in the US suggest growth in demand for oil is likely to remain subdued for awhile, he said.
In other Nymex trading, gasoline for December delivery was down 4.63 cents at USD 1.9513 a gallon and natural gas was off 7.8 cents at USD 5.085 per 1,000 cubic feet.
In London, Brent crude for January delivery fell 15 cents to USD 76.84 on the ICE Futures exchange.
Bureau Report
First Published: Friday, November 27, 2009, 11:12