Oil fell to the lowest price in more than eight months after Standard & Poor’s downgraded the U.S.’s credit rating for the first time. Futures dropped as much as 5 percent after the ratings service lowered the U.S. one level to AA+ late on Aug. 5 and kept the outlook at “negative.” The MSCI All-Country World Index of stocks slid 1.1 percent. The S&P GSCI index of commodity prices dropped 2 percent as energy and agricultural markets tumbled. “There’s flight away from any kind of risky assets at the moment,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “It’s hard to say where the bottom is.” Oil for September delivery fell $2.91, or 3.4 percent, to $83.97 a barrel at 9:17 a.m. on the New York Mercantile Exchange. Oil dropped to $82.52, the lowest intraday price since Nov. 24. Prices have retreated 8.6 percent this year. Crude declined 9.2 percent last week, the biggest decline since the week ended May 6. Brent crude for September settlement on the London-based ICE Futures Europe exchange decreased $3.12, or 2.9 percent, to $106.25 a barrel. The European benchmark contract was at a $22.28-a-barrel premium to U.S. futures and was poised to breach a record $22.67, based on Aug. 2 settlement prices. The Standard & Poor’s 500 Index dropped 1.7 percent to 1,178.52 at 9:41 a.m. in New York. Dow Jones Industrial Average futures fell 1.6 percent to 11,257.97. Group of Seven The Group of Seven nations said they will act to stabilize financial markets following the U.S. rating cut as a slump in Italian and Spanish debt intensified threats to the global economy. The European Central Bank said late yesterday that it will “actively implement” its bond-purchase program, signaling it’s ready to start buying Italian and Spanish securities to counter the sovereign-debt crisis. “The U.S. downgrade is pushing equities and oil lower, and we might see a further slump until the government announces actions to boost liquidity, such as a new round of quantitative easing,” said Eugen Weinberg, an analyst at Commerzbank AG. “The European Central Bank buying Italian and Spanish bonds will increase confidence in markets, helping them recover.” Goldman Sachs Group Inc. maintained its 2012 forecast for Brent crude to average $130 a barrel and recommended investors hold a “long” trading position on December 2012 contracts, New York-based analyst David Greely said in an e-mail today. Hedge funds cut bullish bets on crude oil by the most in more than six months on growing concern that the faltering economic recovery will sap energy demand. The funds and other large speculators cut wagers that prices will rise by 16 percent in the week ended Aug. 2, the most since Jan. 25, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. Crude dropped 5.8 percent on the New York Mercantile Exchange in the period covered by the data. To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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