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Oil Slumps 1 pct After UK Foil Aircraft Threat - ASHARQ AL-AWSAT English Archive
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SINGAPORE (Reuters) – Oil prices fell 1 percent on Thursday after British police said they had disrupted a plot to blow up aircraft in mid-flight, prompting fears of a cut in air travel and consumer confidence that could undermine oil demand.

Brent crude tumbled 75 cents, or 1 percent, to $76.53 a barrel by 0817 GMT, while U.S. light, sweet crude oil prices fell 68 cents to $75.67.

“This could be an accelerated reaction similar to what happened after September 11,” said Dariusz Kowalczyk, senior investment strategist at CFC Securities in Hong Kong.

“After 9/11 prices rose because people were thinking about supply stability. However, later on oil fell, because people said consumer confidence will fall and global growth will slow. After this UK consumer confidence may decline, which will be negative for growth in the UK and beyond, which may affect oil demand.”

Early on Thursday British security authorities raised the threat level to the country to “critical,” which means “an attack is expected imminently,” sending equity markets lower as investors sought the safe have of government bonds.

In co-ordination with measures taken by Britain, the United States government also raised the security threat level for all commercial aviation.

Oil prices had been stable earlier, drifting sideways after data on Wednesday showed an unexpectedly deep 3.2 million-barrel draw in gasoline inventories as demand stayed firm and imports ebbed, while crude supplies fell 1.1 million barrels against forecasts for an 800,000 barrel-decline.S]

The Energy Information Administration (EIA) data does not include the partial closure of BP’s Prudhoe Bay oilfield in Alaska, the biggest in the U.S., accounting for 8 percent of total output.

BP began shutting down the field on Sunday and the U.S. government said full output might not resume until early-2007.

BP has closed in about half of the 400,000 barrel-per-day (bpd) Prudhoe Bay production after finding a corroded pipeline, and will make a decision on Friday whether to shut the western half of the development, where corrosion was less severe.

Oil has soared 25 percent this year on political tensions that traders fear could affect oil supply, including the war between Israel and Hizbollah, which continued to show conflicting signals over whether the violence is escalating or easing.

Israeli troops seized the town of Marjayoun and Qlaiah in south Lebanon on Thursday, witnesses said, even though Israel says it has put off plans for a broader offensive against Hizbollah to give a chance for U.S.-led efforts to form a peacekeeping force.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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