London - AFP
Brent crude sank below $100 a barrel in Asian trade Tuesday, following its New York counterpart lower as markets reeled from the US credit downgrade by Standard & Poor's. Brent North Sea crude for September delivery slipped $4.11, or 3.96 percent, to $99.63, its lowest level since February 8, 2011. New York's main contract, West Texas Intermediate (WTI) light sweet crude for delivery in September shed $4.72, or 5.80 percent, to $76.59 per barrel, a level it had not reached since September 29, 2010. WTI prices had plunged $5.60, or 6.89 percent, to a low of $75.71 in intra-day trade before clawing back some ground. Crude prices went into freefall after the unprecedented downgrade Friday of the US' long-term sovereign debt rating from AAA to AA+, Barclays Capital said in a report. The downgrade also came on the heels of economic data from the US -- the world's largest crude consumer -- showing weak jobs creation and service sector growth numbers in July, which did nothing to reassure spooked traders, the report added. "Crude oil prices fell sharply in the aftermath of the S&P downgrade, and we expect continued pressure on prices until the flurry of negative economic data subsides," it stated. Sinking global equities markets and higher inflation in China -- the world's largest energy consumer -- were also dragging down prices, said Shailaja Nair, Asian managing editor at energy information provider Platts. "If you look at all the regions, you can look at Wall Street plummeting, regional equities plummeting and worries over US debt which is still continuing," she told AFP. China on Tuesday said its politically-sensitive inflation figure hit 6.5 percent in July, its highest level in more than three years. The reading is likely to fuel concern among policymakers anxious about inflation's potential to trigger social unrest, and about instability in the Chinese economy at a time of renewed global financial peril. Some analysts are also concerned Beijing might go too far in tightening monetary policy to curb prices and trigger a sharp slowdown in the world's second-largest economy -- a key driver for other nations' growth. Platts' Nair warned: "The fall (in oil prices) is continuing and... it doesn't seem to show any signs of stopping at present."