* Oil falls below $107 on bailout worries, profit taking
* Market awaiting details on U.S. government's rescue plan
(Adds details, updates prices)
By Alex Lawler
LONDON, Sept 23 (Reuters) - Oil dropped $3 a barrel on
Tuesday, weighed by doubts about the U.S. bailout plan and as
investors booked profits after an historic one-day rise in the
previous session.
Although oil surged a day earlier on hopes the plan would
support the economy and fuel demand, analysts said doubts
lingered over how the package would be paid for. The concern
also pressured European and Asian stocks.
"It started off with a wave of optimism and now perhaps a
bit of realism has kicked in," said Christopher Bellew, a broker
at Bache Commodities.
"The dollar's weak, but the stock market is weak as well.
The implications of that for demand are probably why we're
coming back down again."
U.S. crude for November <CLc1> fell $3.01 to $106.36 a
barrel by 0915 GMT. Brent crude <LCOc1> for the same month was
off $3.12 to $102.92.
The November U.S. crude contract rose nearly $7 on Monday,
while the expiring October contract, which traded up to $25
higher, settled up 15.7 percent at $120.92 -- the biggest
one-day gain on record.
"I think traders are taking profits after the rally in both
October and November contracts last night," said Gerard Rigby,
an independent energy consultant based in Sydney.
"There are still a lot of question marks on the bailout plan
and the longer it takes to be approved, the more doubts the
market will have."
The $700 billion plan to shore up the battered U.S.
financial system looked set to drag into next week as Washington
lawmakers haggled over how exactly they could make Wall Street
pay for its rescue. []
Oil's gain on Monday was helped by a drop in the dollar,
which can boost the appeal of commodities to investors. The U.S.
currency was up slightly on Tuesday against a basket of other
major currencies.
The U.S. regulator of futures markets, the Commodity Futures
Trading Commission, said on Monday it was reviewing the price
jump to ensure that the trading was valid.
Since hitting a record high of $147.27 a barrel in July, oil
has tumbled on mounting evidence that high energy costs and
slowing economic growth were undercutting global fuel demand.
Oil use in the United States, the world's biggest consumer,
is running about 4 percent below last year, according to the
latest government data.
In a report titled "The world did not run out of crude oil
on October expiry", BNP Paribas' Harry Tchilinguirian said the
prices reached by the October contract were not sustainable in
the current economic context.
But developments such as lower Saudi Arabian supply to oil
companies, as reported by Reuters on Monday, unrest in Nigeria
and higher-than-expected Chinese imports would support prices,
Barclays Capital said in a report.
(Reporting by Fayen Wong in Perth and Alex Lawler in London)
