Oil prices tumble on Goldman charges

19th April 2010, Comments 0 comments

Oil prices slid beneath 82 dollars on Monday, extending last week's losses as financial markets reeled from the impact of fraud charges against Wall Street icon Goldman Sachs, analysts said.

New York's main contract, light sweet crude for delivery in May, slumped 2.13 dollars at 81.11 dollars a barrel.

Brent North Sea crude for June shed 2.24 dollars to 83.75 dollars in midday London trade.

"The oil market is reacting to the news about the fraud charges against Goldman Sachs filed in the United States last week," said Victor Shum, an analyst with energy consultancy Purvin and Gertz.

"The financial markets are still suffering from the fallout of the charges against Goldman and crude oil is reacting to that," the Singapore-based analyst told AFP.

A civil suit filed by the Securities and Exchange Commission last Friday accused Goldman of "defrauding investors by misstating and omitting key facts" about a financial product based on subprime mortgage-backed securities.

The securities were a key contributor to the financial crisis that peaked in 2008 because many contained risky mortgages.

The charges are believed to be the first brought against a Wall Street firm for speculating on the collapse of the US housing market, which is still struggling to emerge from the worst financial crisis in decades.

Markets were also keeping a close watch on the financial fallout of the volcanic ash cloud.

Britain ordered a fleet of navy ships to rescue stranded air passengers as airlines stepped up an angry campaign to fly again in the volcanic cloud which has paralysed Europe's airspace for five days.

The huge ash cloud of kept up its regime of chaos over Europe, forcing the cancellation of another 20,000 flights, though experts said the eruption in Iceland was losing power.

Europe's three main airports in London, Paris and Frankfurt, remained giant ghost towns, ordered to stay closed until at least Tuesday. Some experts said severe disruptions could run several more days.

Oil prices had already fallen sharply last Friday, dampened by an unexpected fall in a US consumer sentiment and the fraud charges slapped on Goldman Sachs.

The University of Michigan/Reuters consumer sentiment index's preliminary reading for April fell to 69.5, from a final March reading of 73.6, in an indication slackening demand for oil in the world's biggest energy consuming nation.

It was the lowest level since November 2009. Economists had forecast the index to climb to 75.0.


© 2010 AFP

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