SINGAPORE (Reuters) - Oil dropped more than $1 to below $109 on Wednesday, deepening this week’s sharp fall as traders looked past Hurricane Gustav to focus on a wobbly global economy and the gloomy outlook for energy demand.

Oil has tumbled more than $6 since Friday, touching its lowest in five months after early signs that a weakened Gustav caused little damage to U.S. oil installations.

U.S. crude fell 87 cents to $108.84 a barrel by 2:41 a.m. EDT, after settling on Tuesday at $110.15, below its 200-day moving average for the first time since May 2007. It had hit a low of $108.51 earlier on Wednesday.

Technical traders say the break of that key support level could contribute to a deeper decline, extending oil’s nearly $40 a barrel slump since its July 11 record high of $147.27.

London Brent crude slid 74 cents to $107.60, after falling to as low as $107.25.

Although it may be days before energy companies are able to fully assess and restore the one-third of U.S. refining capacity and one-quarter of oil output that was shut as a precaution, many oil traders had already turned their attention elsewhere.

“It’s the economy, economy, economy. Everyone’s worried about demand destruction,” said Robert Nunan, a risk management executive at Tokyo-based Mitsubishi Corp.

“The market is bearish short- to medium-term, although it has been supported by other factors such as the hurricane and the situation in Russia and Georgia,” he said.

Signs of slowing oil consumption in major developed economies have undermined the fundamental argument that booming Asian giants such as China and India are straining oil supplies, while a rebound in the dollar over recent months has prompted many funds to unwind their short-dollar/long-commodities trades.

The dollar rose to an 11-month high against a basket of major currencies on Wednesday, on a souring global economic outlook.

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SINGAPORE - Oil prices rose Monday in Asia to near $117 a barrel as Hurricane Gustav advanced on Louisana, prompting companies to shut down drilling and refining operations in the Gulf Coast coast region.

Light, sweet crude for October delivery was up $1.39 at $116.85 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract slipped 13 cents on Friday to settle at $115.46 a barrel.

“There’s no question the drilling platforms in the Gulf of Mexico and the big refineries between Houston and New Orleans are in the path of this hurricane,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. “There’s likely to be some damage. We could see an extended period of disruption.”

Oil companies are shutting down productions and evacuating facilities ahead of the storm. Exxon Mobil Corp., Royal Dutch Shell PLC and Valero Energy Corp., North America’s largest refiner, were among the companies that said they had shut down Gulf Coast refineries, primarily in south Louisiana.

Altogether, about 2.4 million barrels of refining capacity have been halted, roughly 15 percent of the nation’s total, according to figures from Platts, the energy information arm of McGraw-Hill Cos. The U.S. Gulf Coast is home to nearly half the nation’s refining capacity.

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BAGHDAD, Iraq (CNN) — Iraq has signed its first major oil deal with a foreign company since the fall of Saddam Hussein’s regime, a spokesman for the Iraqi Oil Ministry said Saturday.

It was the first time in more than 35 years that Iraq has allowed foreign oil companies to do business inside its borders.

The contract with the China National Petroleum Corporation could be worth up to $3 billion. It would allow the CNPC to develop an oil field in southern Iraq’s Wasit province for about 20 years, Oil Ministry spokesman Assim Jihad said.

Iraq’s Cabinet must still approve the contract, but Jihad said that would happen soon and work could start within a few months.

The Chinese company will provide technical advisers, oil workers and equipment to develop al-Ahdab oil field, providing fuel for al-Zubaidiya power plant in Wasit, southeast of Baghdad, bordering Iran, Jihad said.

Once development begins, the field is expected to start producing a preliminary amount of 25,000 barrels of oil a day and an estimated constant daily amount of 125,000 barrels after three years, he said.

Iraq currently produces about 2.5 million barrels a day, 2 million of which are exported daily, Jihad said. That is close to its status before the U.S.-led war that toppled Saddam in 2003, but below its levels prior to the Persian Gulf War in 1991.

Iraqi Oil Minister Hussein Shahrastani said in July that he is confident Iraq will be able to double its production in the next five years.

As it did with other international companies, the Saddam regime had a partnership contract with CNPC signed at the end of the 1990s that entitled the company to share profits. The current contract, however, will be only a “service contract” under which CNPC is simply paid for its services, Jihad said.

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ROME, Italy (AP) — Italy’s national airline Alitalia says it has filed for bankruptcy protection, taking the first step in reshaping what has been a failing company.

Alitalia said in a statement Friday that its board had asked the government to appoint an administrator and had declared insolvency to a Rome court.

The airline has been losing almost $3 million a day — hurt by labor unrest, competition from budget airlines and high fuel prices.

Its shares have been suspended from trading since June.

The government has been trying to sell its 49.9 percent stake in the airline following a failed bid by Air France-KLM earlier this year.

It has been involved in negotiations to save the carrier, but the plan reportedly envisages a breakup of Alitalia.

The profitable assets would reportedly be taken over by a group of Italian investors ready to inject about $1.5 billion into the airline.

The remaining assets would then be spun-off into a separate company for liquidation.

Source: CNN.com

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SHANGHAI, China - PetroChina is expected to report that its first-half net profit fell by at least a third, analysts say, as losses in its refining business eroded gains from surging crude oil prices.

Even last year when PetroChina’s market value briefly topped $1 trillion by some calculations trouble was brewing at the traded unit of the country’s leading oil and gas producer.

While other global oil giants are reporting record profits, Chinese government price controls prevent PetroChina and other domestic refiners from passing on higher costs for crude oil to consumers. So their refining operations are bearing heavy losses, despite billions of dollars in subsidies.

On Monday, Asia’s biggest refiner, China Petroleum & Chemical Corp., or Sinopec, reported a 77 percent plunge in net profit, to 8.3 billion yuan ($1.2 billion), in the January-June half-year. That compared with 37.8 billion yuan in net profit a year ago.

The precipitous decline came despite 33.4 billion yuan ($4.9 billion) in subsidies in the first half of the year, Sinopec said.

In the first quarter, PetroChina reported that net profit plunged 31.5 percent to 28.8 billion yuan. First-half results are expected Wednesday.

Qiu Xiaofeng, a petroleum analyst at China Merchants Securities in Shanghai, estimates that PetroChina will report 48.5 billion yuan ($7 billion) in net profit for the first half, down about 40 percent from 81.8 billion yuan in January-June 2007.

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TOKYO, Aug 14 (Reuters) - The dollar gained for a 10th straight day against a basket of currencies on Thursday, with investors cutting holdings of the euro and higher-yielding currencies on a downbeat view of the global economic outlook.

But the dollar slipped against the yen as more Japanese retail traders slashed more of their big positions in the Australian and New Zealand dollars after getting burned by the sharp slide in those currencies over the past few weeks.

The dollar has surged across the board as investors see major central banks cutting interest rates to limit the damage from the global economy’s slowdown, while the Federal Reserve is expected to keep interest rates on hold after having already slashed them.

Market players have been caught off guard by the sudden downturn in global economic expectations, leading to heavy selling of once popular bets buying the euro, Australian dollar and commodities on a view that world growth would hold up.

Data on Wednesday showing that Japan’s economy contracted in the second quarter at the sharpest pace since its last recession in 2001, highlighted the spreading pain from the U.S. housing crisis and global credit crunch.

The Bank of England also offered a bleak assessment of the outlook for growth in its quarterly inflation report on Wednesday as well, opening the door to interest rate cuts and sending sterling tumbling for its biggest one-day drop in eight months.

"Reading the report almost leaves one overwhelmed by impending doom," said currency strategists at RBC Capital Markets in a note to clients.

The dollar dipped 0.1 percent from late U.S. trade to 109.39 yen down from a seven-month peak of 110.40 yen struck earlier this week.

The euro inched down 0.2 percent to $1.4901 after touching a six-month low of $1.4815 this week. Sterling was little changed at $1.8061

The dollar index, which gauges its performance against six major currencies, edged up 0.2 percent to 76.373 — near a six-month high reached this week.

A top Australian central banker said on Thursday it would not wait for inflation to fall before cutting rates, pushing the Aussie down.

The Australian dollar fell 0.4 percent to $0.8710 having bounced back from a seven-month low of $0.8590 hit on Wednesday.

The Aussie shed 0.4 percent to 95.29 yen but was up from a four-month low of 93.09 yen. In the past two weeks, the Aussie has slid 8 percent versus the yen.

The Aussie and kiwi both surged overnight as some speculators rushed to cover short positions built up against the yen during their drop, while some Japanese individual traders were snapping up the high-yielding currencies.

Traders in Tokyo said that while some of the Japanese day traders had panicked the previous day and were forced to sell the Aussie and kiwi to cut losses, others were seeing this as an opportunity to buy.

A trader at a Japanese securities house said the better mix of buying and selling by the traders suggested the Aussie and kiwi may have hit bottom against the yen for now.

The individual traders, who make leveraged bets with borrowed funds of 100 times or more what they put up, had lifted long positions favouring the Aussie and kiwi to a record high in the past few weeks on the Tokyo Financial Exchange. (Reporting by Eric Burroughs; Editing by Edwina Gibbs)

Source: guardian.co.uk

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GENEVA (AP) — After coming tantalizingly close to a historic trade deal, World Trade Organization talks collapsed Tuesday in a dismaying blow to seven years of efforts to open up the global economy.

Once promised as a recipe for lifting millions of people out of poverty, the end to nine days of high-level talks left no new trade openings for farmers and manufacturers, no global economic boost and no grand deal for Third World development.

“This is a very painful failure and a real setback for the global economy when we really needed some good news,” said Peter Mandelson, the European Union’s trade commissioner.

His disappointment was shared by top negotiators from the United States, Brazil and India, who have played leading roles since the World Trade Organization launched its current trade round in the Qatari capital of Doha in 2001.

While the talks have struggled before, this failure was perhaps the most devastating.

Faced with global unrest from rising food prices, credit problems from shaky financial markets and the threat of economic downturn, negotiators hoped that a deal this week to open farm and industrial markets would go some way to alleviating these problems.

It was all the more disappointing because the talks made greater progress than they had in years on issues such as farm subsidies and manufacturing tariffs — which were responsible for scuttling previous high-level trade efforts.

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WASHINGTON (Reuters) - U.S. regulators took over two banks on Friday and sold them to Mutual of Omaha Bank, the sixth and seventh bank failures this year as financial institutions struggle with a housing bust and credit crunch.

Two weeks after the Federal Deposit Insurance Corp seized IndyMac Bancorp Inc (IDMC.PK), the Office of the Comptroller of the Currency said it closed First National Bank of Nevada and First Heritage Bank NA of California.

First National, characterized as undercapitalized, had total assets of $3.4 billion and $3 billion in deposits. First Heritage, described as critically undercapitalized, had assets of $254 million and $233 million in deposits, regulators said.

The FDIC said the cost of the transactions to its insurance fund is estimated to be $862 million, adding that the two failed banks represent just 0.3 percent of $13.4 trillion in total industry assets at about 8,500 FDIC-insured institutions.

The FDIC said the 28 offices of the two banks will reopen on Monday as Mutual of Omaha Bank. Over the weekend, customers can access their money by writing checks, using automatic teller machines or debit cards.

Mutual of Omaha Bank currently has more than $750 million in assets and operates 14 retail branches in Nebraska and Colorado with commercial lending offices in Dallas and Des Moines, Iowa, the FDIC said.

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BRUSSELS (AFP) - InBev may be based in Belgium and have strong ties to Brazil, but the brewing giant has grand plans to sell Budweiser — what it calls America in a bottle — to the world.

But InBev and its ambitious Brazilian chief executive Carlos Brito face a huge challenge to convince the world that it wants the iconic American brew as they try to make their 52-billion-dollar takeover of Budweiser-owner Anheuser-Busch pay off.

“Budweiser brings the great America in a bottle. That’s what consumers love,” Brito told journalists last week as he announced InBev’s planned takeover of Anheuser-Busch.

During the month-long takeover battle for Anheuser-Busch, Brito sought to win over the sceptical board at his US rival by promising to make Budweiser the merged company’s flagship international premium brew.

Using InBev’s extensive international distribution network, he said he envisaged Budweiser following in the steps of other well-known American consumer products that ventured beyond US shores.

“When I look at other American companies that have done this before — like McDonald’s, like Pepsi, like Coke, like Frito-Lays, so many companies that have expanded abroad — I’m very excited,” Brito said.

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NEW YORK - The price of oil recorded its biggest weekly drop ever, and a gallon of gas finally pulled back from its record high. So is it time to declare the energy bubble popped?

Experts won’t go that far just yet.

“It’s too early to say we’ve seen the worst of it,” said Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service in Wall, N.J. “We would be Pollyannish if we believe one week represents a trend.”

Still, with oil recording yet another drop on Friday, some industry experts who just days ago thought there was more juice left in oil’s meteoric run are reconsidering.

“If this is not the bubble’s implosion, than it’s a reasonable facsimile,” analyst and trader Stephen Schork said in his daily market commentary. “Time will tell. Nevertheless, for the time being we no longer care to hold a bullish view.”

Light, sweet crude for August delivery fell 41 cents Friday to settle at $128.88 on the New York Mercantile Exchange — well below its trading record of more than $147 a week earlier.

The average price of a gallon of regular gas fell about a penny for the day, to $4.105, according to auto club AAA, the Oil Price Information Service and Wright Express. Diesel prices dipped three-tenths of a cent to $4.842 a gallon.

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