Oil fell more than $4 a barrel today as worries over economic growth spread after Standard & Poor's cut the United States' top-tier credit rating and European central banks struggled to contain a deepening debt crisis.
Fear gripped financial markets as the fallout from the historic downgrade of the US debt rating by S&P drowned out pledges of assistance from Europe's central bank and soothing words from the Group of Seven.
The European Central Bank stepped into bond markets today, backing up a pledge to support Spain and Italy to help avert financial meltdown in the euro zone.
But investors headed for safe havens, piling into gold, which hit a new record above $1,715 an ounce, while many commodities and share markets fell.
Brent crude slumped to $105.43 before edging up to around $106.00. US crude futures slid as low as $82.65 a barrel but recovered to $83.00.
Goldman Sachs said today it maintained overweight recommendation on commodities and oil relative to other assets, although is added that risk to its constructive commodity views had risen.
US oil is down around 7 per cent this year compared with a rise of 15 per cent last year, swinging between a high of $114.83 a barrel and a low of $82.87, and about 43 per cent lower than the all-time high of $147.27 touched in 2008.
Brent has gained 13 per cent, staying between $127.02 and $92.37, against an increase of 22 per cent last year.
The recent sell-off has pushed down sharply relative-strength indexes (RSIs) for both Brent and US crude oil, suggesting both complexes may have fallen too fast, and encouraging some traders and analysts to look for a rally.
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