Oil dips on bleak news of US economy and massive bailout of ailing insurer AIG

03-Mar-09
Benchmark crude for April delivery has fallen by more than a dollar to US$$43.7 on the Nymex, and Brent prices settled at US$45.19 on the ICE Futures exchange in London. This fall has been triggered as hopes for a quick end to the global slump have been dashed on fresh news of dismal US economic news and the possibility of a US$30 bln bailout of ailing insurer American International Group Inc. earlier, AIG has received about US$150 bln in loans from the government, which holds an 80% stake in the company. US GDP has contracted 6.2% in Q4, the worst showing in 25 years, as per the Commerce Department. These reports point towards a long-lasting weakening of demand for oil, and it is predicted that oil could fall to US$25 a barrel within the next three months, by Alan Plaugmann, head of futures and options trading at Denmark-based Saxo Capital Markets.
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