* Oil dives to 7-month low on Lehman, banking turmoil
* Minor damage seen from Hurricane Ike
* Technical support next seen below $90 a barrel
(Updates prices, adds fresh quotes, Nigerian attacks)
By Annika Breidthardt
SINGAPORE, Sept 16 (Reuters) - Oil tumbled by as much as 4
percent to a seven-month low on Tuesday, in free fall for a
second day as Lehman Brothers' collapse made investors ditch
oil for safe-haven assets, and on fears the credit crisis will
hurt the real economy.
Reports that Hurricane Ike caused minor damage to U.S. oil
platforms and refineries also weighed on prices, adding to the
previous session's more than $5 fall and over 37-percent
decline from its peak above $147 in mid-July.
U.S. light crude for October delivery <CLc1>, which fell as
much as $4.15 at one point, was down $3.22 at $92.49 a barrel
by 0630 GMT, tumbling in concert with everything from Asian
stock markets to grains. The yen edged up versus the dollar on
widespread risk aversion in the wake of Wall Street's turmoil.
London Brent crude <LCOc1> fell $3.52 to $90.72 a barrel at
the same time, having slumped earlier by as much as $4.44 to
touch its lowest since Feb. 8.
"It's a bit of panic in the markets," said Jonathan
Kornafel, Asis Director at U.S.-based options trader Hudons
Capital Energy. "If the economic turmoil continues, demand will
continue to drop."
On Monday, Wall Street had its worst day since markets
reopened after the September 11 attacks, with investors fleeing
to safer havens such as gold.
Lehman Brothers' <LEH.P> bankruptcy, the sale of Merrill
Lynch <MER.N> and the struggle of American International Group
<AIG.N> all stirred fears about the U.S. financial sector's
stability and the outlook for the global economy.
And on Tuesday, the three top global ratings agencies
slashed their rating on AIG by at least two notches, adding
more downgrades could follow. []
"If AIG tanks, that will be the big one. AIG has more to do
with the oil price right now than the Saudis do," said Larry
Grace, an analyst at Kim Eng Securities in Hong Kong.
Following crude oil's sharp losses -- down 20 percent since
the start of the month -- technical analysts now focused on
support below $90 a barrel and into the $85 to $80 a barrel
region for the next leg lower. [].
RESTARTING AFTER IKE
A big chunk of U.S. energy production shut by Hurricane Ike
could restart within a week, with the only reports of damage to
refineries so far included Shell's <RDSa.L> Deer Park Plant and
ConocoPhillips' <COP.N> Alliance refinery. []
Nigerian militants on Tuesday launched fresh attacks on a
Royal Dutch Shell <RDSa.L> oil pipeline and Chevron-operated
<CVX.N> oilfield in the niger Delta, as its "oil war" against
oil companies and security forces entered a fourth day, but
that did little to lift oil futures[]
The focus later on Tuesday shifts to the U.S. Federal
Reserve, which is expected by many analysts to keep interest
rates on hold, although after Monday's Lehman shockwaves
investors are pricing in a significant chance of a
quarter-point rate cut aimed at calming roiled markets.
[]
The result of its meeting is expected to be announced at
around 2:15 p.m. EDT (1815 GMT).
The market is also looking ahead to Wednesday's U.S. oil
stocks data, expected to show a 3.4 million barel draw down in
crude inventories, a 2.0 million barrel drop in distillate
supplies and a 4.0 million barrel decline in gasoline stocks.
[]
(Additional reporting by Tom Miles in Hong Kong)
(Reporting by Annika Breidthardt; Editing by Sambit Mohanty)
