* Oil falls below $90 to lowest since February
* Credit crisis fallout seen hitting oil demand
* Iran says $100 is too low, market oversupplied
(Updates prices)
LONDON, Oct 6 (Reuters) - Oil fell below $90 a barrel on
Monday to its lowest in eight months, pressured by expectations
that the global credit crisis will bring a sharp fall in oil
demand.
U.S. light crude for November delivery <CLc1> fell $4.28 a
barrel to $89.60 by 1144 GMT, its fourth day of losses.
It touched a session low of $88.89, its lowest since early
February. Prices have dropped nearly 40 percent from a peak of
$147.27 on July 11.
London Brent crude <LCOc1> was down $3.99 at $86.26 a
barrel.
"The prevailing macro sentiment is now crystallising around
the notion that we are heading into a synchronised global
slowdown, a mirror image of the across-the-board expansion we
saw from 2004 to early 2007," said Edward Meir, of broker MF
Global.
Oil demand in the United States, the world's top energy
consumer, has slumped this year under the weight of record
prices, while consumption in Japan and Europe has also weakened.
There are already questions over China, where rapid economic
growth helped trigger oil's rise from just $20 a barrel in 2002.
"I think the market's starting to build this into prices,"
said Mark Pervan, senior commodities analyst at ANZ.
"You would expect the market is now joining the dots and
thinking ... this will probably flow through to China."
U.S. and European governments are trying to underpin the
financial sector but this has so far failed to reassure
investors.
The United States has passed a $700 billion financial rescue
plan, while European governments have offered guarantees to
savers, as well as coming to the aid of troubled banks.
But European shares were down more than 5 percent on Monday,
following on from heavy losses in Asian markets.
DOLLAR CLIMBS
The U.S. dollar's rise versus the euro has added to pressure
on commodities, which are mostly priced in the U.S. currency.
<USD/>
Coffee, sugar, corn were down sharply, copper fell almost 7
percent to a 20-month low. But gold, a traditional safe haven in
turbulent times, firmed, recouping earlier losses mainly due to
the strong dollar <XAU=>.
With oil prices sliding, OPEC member Iran said $100 a barrel
was too low and urged members of the Organization of the
Petroleum Exporting Countries (OPEC) to respect their quotes to
prevent oversupply from worsening.
"With the OPEC decision to cut, oversupply could be
controlled in the first quarter of 2009," said Oil Minister
Gholamhossein Nozari, referring to OPEC's agreement last month.
"But if they (OPEC members) do not carry out the cut, oversupply
could reach 1.2 million bpd." []
OPEC President Chakib Khelil said OPEC would seek to balance
the market when it meets in December.
He told Algerian government newspaper El Moudjahid that
demand had declined by an estimated three million barrels per
day as a result of falling requirements in the main consuming
countries, while supply had remained steady.
OPEC oil supply fell in September, the first monthly decline
since April, due to disruptions from two of its African members
and lower shipments from Iran and Saudi Arabia, a Reuters survey
showed on Friday. []
But ANZ's Pervan warned that OPEC's influence was limited in
a market being driven more by demand fears than supply concerns.
"I have (oil's floor) at $80 now, but there are risks it
could move down to $60," he said.
(Reporting by Jane Merriman in London and Jonathan Leff in
Singapore, editing by Anthony Barker)
