OIL prices fell to US$104 (S$147.86) a barrel on Thursday in Asia as investors weighed supply delays in the Gulf of Mexico against concerns that the US credit crisis may slow global economic growth and hurt crude demand.
Light, sweet crude for November delivery was down US$1.55 to US$104.18 a barrel in electronic trading on the New York Mercantile Exchange midafternoon in Singapore. The contract fell overnight 88 cents to settle at US$105.73.
Traders are concerned about the turmoil in the US financial system will impact economic growth and crude demand from the world's biggest economy.
President George W. Bush strongly urged Congress to act quickly to pass a US$700 billion financial industry bailout, warning Americans in Wednesday speech that failing to act fast risked dire economic consequences such as disappearing retirement savings, rising foreclosures, lost jobs and closed businesses.
'Markets hate uncertainty, and this thing is hanging over everybody's head,' said Mr Gavin Wendt, head of mining and resources research at consultancy Fat Prophets in Sydney.
'I don't thinkanyone is too keen to take a position in oil either way right now.'
With the administration's original proposal considered dead in Congress, top House leaders issued an upbeat statement late on Wednesday saying there was progress toward revised legislation that could pass.
Mr Bush summoned presidential candidates Barack Obama, John McCain and legislative leaders to an extraordinary White House summit in hopes of hashing out a deal.
Oil investors are also eyeing the impact the bailout plan may have on the value of the dollar. Investors often buy crude futures as a hedge against a weakening dollar and inflation.
The 15-nation euro was steady on Thursday at US$1.4706. The dollar was little changed at 105.81 yen.
'Assuming the package is implemented, I think the inevitable upshot is that it will make commodities more attractive because you'll see a lot more dollars printed, which will devalue the US currency,' Mr Wendt said.
Mexico's state oil company said on Tuesday it temporarily reduced oil production because US refineries damaged by Ike have cancelled shipment orders.
Petroleos Mexicanos, or Pemex, lowered its daily output by 250,000 barrels a day. The company said it expects production to be back to normal by the end of the week.
Pemex produced an average of 2.75 million barrels a day in August, the latest available output figure.
About 66 per cent of oil production and 61 per cent of natural gas output in the Gulf of Mexico remains shut in after the passage of Hurricane Gustav and Ike, according to the US Minerals Management Service.
The Gulf area is home to a quarter of US oil production and 40 per cent of refining capacity.
'There's not a lot of spare supply around,' Mr Wendt said. 'We're only one supply hiccup away from prices being US$20 a barrel higher.'
Opec's decision earlier this month to cut production by 520,000 barrels a day and militant threats to Nigerian oil operations have added to the supply shortage.
In other Nymex trading, heating oil futures fell 1.03 cents to US$3.003 a gallon, while gasoline prices rose 1.05 cents to US$2.605 a gallon.
Natural gas for October delivery dropped 2.7 cents to US$7.652 per 1,000 cubic feet.
In London, November Brent crude rose 65 cents to US$103.10 a barrel on the ICE Futures exchange. -- AP
