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Oil prices plunge
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September 24, 2001: 1:54 p.m. ET
Quotes sink near 2-year low on fears global recession will slash demand
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NEW YORK (CNNfn) - Oil prices plunged Monday on concerns a sagging world economy will pinch demand in the wake of the Sept. 11 terrorist attacks on New York and Washington.
U.S. NYMEX crude plunged $3.42 a barrel to $22.55, its lowest level in nearly two years.
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 CNNfn's Deb Marchini takes a look at oil prices and the economy. |
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Brent crude oil futures for November delivery dropped $3.03 to $22.55 in late London trade, also near a two-year low.
"No one fundamental reason can explain this whopping fall," GNI oil analyst Lawrence Eagles told CNN. "There is concern that demand, particularly from the airline industry, could fall. There are clear recessionary concerns."
Eagles also said short sellers had expected some action from the U.S. in retaliation for the attacks on the World Trade Center and Pentagon. Short sellers bet oil could be bought cheaper at a future date.
The downward momentum also triggered computer programs to sell oil futures automatically as they reached key technical levels.
The prospects for global oil demand growth next year are being revised lower steadily as economists calculate the after-effects of the suicide air attacks on the United States.
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OPEC, or the Organization of the Petroleum Exporting Countries, is meeting this week in Vienna after recently cutting oil output for the third time this year in a bid to offset faltering demand and prop prices.
Officials of the cartel have made clear that with prices near the middle of their $22 to $28 a barrel target range for a basket of OPEC crudes they see no need to further change output.
OPEC also is keen to assure the world that it will maintain secure supplies and that it will act if there is a disruption. But despite calming words from OPEC, many oil dealers expect a volatile market as prices react to rapidly changing events and rising tensions in the Middle East.
Investment bankers are drawing a parallel to the period around the 1990-1991 Gulf crisis, when U.S. military conflict in the Middle East combined with an economic slowdown.
Even as demand weakened, instability in the oil-rich Gulf region drove prices up to $40 per barrel in October 1990. So far, the lack of any oil supply disruption has kept prices well below that level and worries that Iraq, Iran or Libya could be drawn into the conflict have been unfounded.
The United States tried Monday to surround Islamic militant Osama bin Laden with a far-flung political, military and financial net, sending a team to Pakistan, positioning troops on land and sea, promising a written indictment against the man who tops its wanted list for the attacks and promising to freeze his and other terrorists' assets.
Bin Laden, the wealthy Saudi-born Muslim dissident believed to be hiding in Afghanistan, remained the top target of U.S. efforts.
Secretary of State Colin Powell said Sunday that Washington will release evidence linking him to the attacks, in a bid to build support for the coalition President Bush is trying to assemble for his global "war on terrorism."
Afghanistan's ruling Taliban, which has sheltered bin Laden, has said it will not turn him over unless it is given proof of his involvement in the attacks. 
-- Reuters contributed to this report
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