Oil slips below $76 on rising global security concerns

LONDON: Oil slipped almost $1 to below $76 a barrel on Thursday after the UK government said it had thwarted a plot to blow up an aircraft in trans-Atlantic flight, triggering falls in stock markets and a rise in safe haven bonds. US oil fell as much as $1.1 to $75.3 on the news, and was trading at $75.7 a barrel. London Brent crude was down 71 cents at $76.6, off its $76.15 session low.

The UK and the US stepped up security and London’s Heathrow airport ground almost to a standstill.

The news reined in oil prices that had risen to record highs this week on BP’s decision to throttle back output at its Prudhoe Bay oilfield in Alaska, the biggest in North America. “There is more risk in the world. At times of heightened uncertainty people sometimes become more risk averse and it sparks a broader sell-off,” Craig Pennington, energy portfolio manager at Schroders in London, said of the price move.

Dariusz Kowalczyk, senior investment strategist at CFC Securities in Hong Kong, said oil demand would suffer if Thursday’s events led to a downturn in consumer confidence. “After 9/11 prices rose because people were thinking about supply stability.

However, later on oil fell because people said consumer confidence will fall and global growth will slow. After this UK consumer confidence may decline, which will be negative for growth in the UK and beyond, which may affect oil demand.”

Equity markets also fell as investors sought the safe haven of government bonds. Sterling dropped against the dollar.

Oil prices earlier had been drifting sideways after US data on Wednesday showed an unexpectedly deep draw in gasoline and crude inventories in the world’s top consumer. The Energy Information Administration (EIA) data does not include the partial closure of BP’s Prudhoe Bay oilfield which accounts for 8% of total US output.

Data on Thursday showed crude imports to China, the world’s second biggest consumer, fell to their lowest level in 11 months in July. But at the same time imports of refined products were 137% above year-ago levels. Oil has soared 25% this year on supply disruptions in Nigeria and Iraq, the dispute over Iran’s nuclear programme and the war in Lebanon.