PARIS: Oil prices tumbled to their lowest in almost a year Tuesday in Europe amid a global sell-off of equities and commodities triggered by investor fears the U.S. will soon fall into recession.
Benchmark oil for September delivery was down $2.12 to $79.19 a barrel in early afternoon time in Europe in electronic trading on the New York Mercantile Exchange. Earlier in the session, the contract fell to $78.09, the lowest since September 2010. Crude fell $5.57, or 6.4 percent, to settle at $81.31 on Monday.
In London, Brent crude was down $2.05 at $101.69 per barrel on the ICE Futures exchange.
A downgrade of U.S. debt one notch from AAA to AA+ by Standard & Poor's announced Friday sparked investor panic this week. Oil traders often look to equities as a barometer of overall investor confidence, and Monday the Dow Jones industrials plunged 634.76 points, or 5.6 percent, the sixth-worst point decline for the Dow in the last 112 years.
Most European stock markets were sharply lower Tuesday, on the back of steep losses in Asia overnight.
By midday Germany's DAX was down 3.3 percent at 5,724 while the CAC-40 in France was 1.1 percent lower at 3,089. The FTSE 100 index of leading British shares was down 1.8 percent at 4,976.
U.S. stocks were also poised for further falls at the open, a day after the Dow Jones industrial average fell a dizzying 634 points. Dow futures were down another 0.9 percent at 10,625 while the broader Standard & Poor's 500 futures fell the same rate to 1,099.
``It's clear we're entering, or are on the precipice of, another global financial crisis,'' said Richard Soultanian, an analyst with NUS Consulting. Soultanian expects crude to fall to between $55 and $60 before rebounding to the mid-$70s in the fourth quarter.
