* No visible signs of damage to U.S. refineries from Ike
* Lehman, Merrill Lynch roil markets, spur flight to quality
* Oil falls to near seven-month lows
(Recasts, adds quotes, updates prices, details)
By Matthew Robinson
LONDON, Sept 15 (Reuters) - Oil plunged $4 to below $97 a
barrel on Monday as investors fled to safer havens due to
turmoil in the U.S. financial system and on early signs
Hurricane Ike spared key U.S. energy infrastructure.
Lehman Brothers <LEH.N> filing for bankruptcy protection and
Bank of America's <BAC.N> agreement to buy Merrill Lynch <MER.N>
stirred concerns mounting global economic problems would slow
energy demand further, sending investors out of oil and into
safer havens. []
U.S. crude <CLc1> dropped $4.28 to $96.90 barrel by 1024 GMT
after touching a nearly seventh-month low of $96.31 a barrel.
U.S. oil dropped below $100 briefly on Friday for the first time
since early April, with trade open for a special session on
Sunday due to Hurricane Ike.
London Brent crude <LCOc1> fell $3.83 to $93.75 a barrel.
Energy firms rushed to offshore facilities and coastal
refineries to check for damage on Sunday after Hurricane Ike's
direct hit on the Houston energy hub left a quarter of U.S. oil
and refined fuel production idled and millions without power.
Early reports from emergency officials and oil companies
indicated little or no severe damage to energy infrastructure --
signalling a possible quick recovery to production -- though
near-term supply problems were expected. []
"The sell-off is partly because Hurricane Ike hasn't done
significant structural damage to oil facilities as well as
growing concerns about the economy," said David Moore,
commodities strategist for Commonwealth Bank of Australia.
"It has been quite a spectacular turn of events at Lehman
and Merrill and the stresses in the financial system are
sparking concerns about economic outlook and how that will weigh
on global energy demand."
High fuel prices and wider economic problems have dragged
down oil demand in the United States and other large consumer
nations, sending crude prices from a record high over $147 a
barrel in July.
Surging demand from emerging economies like China launched
oil on a six-year rally, with additional support coming this
year as investors rushed into oil as a hedge against inflation
and the weak dollar.
The U.S. dollar sank even as crude tumbled on Monday, with a
broad flight from risk igniting U.S. Treasury debt, gold and the
low yielding Japanese yen. []
"The oil and dollar story seems to have changed," said
Michael Davies, analyst at Sucden. "While the flight to quality
has seen gold move up today, oil doesn't seem to be getting used
as a hedge at the moment, as the sentiment in the market is
still bearish."
China's central bank cut the cost of bank loans for the
first time since Feb. 2002 to prop up the slowing economy.
[]
Militants in OPEC member Nigeria attacked a Royal Dutch
Shell <RDSa.L> oil installation on Monday in a third day of
heavy fighting with security forces. []
(Reporting by Matthew Robinson and David Sheppard in London,
Fayen Wong in Perth)
