July 7, 2005

Oil off $2 after London attacks

LONDON (Reuters) - Oil prices fell 3 percent on Thursday
after explosions on London's transport system that appeared to
be a co-ordinated terrorist attack.

U.S. crude fell to a low of $57.20 and by 1115 GMT
was off $2.20 at $59.08 a barrel. Crude set a new record high
of $62.10 just before the attacks on worries about the impact
on oil supply of a hurricane in the U.S. Gulf.

Brent crude in London fell to a low of $55.55
before recovering to $57.50 a barrel, down $2.35 on the day.

British Prime Minister Tony Blair said it was "reasonably
clear" that London had been hit by terrorist attacks.

Dealers said that if the explosions were an attack an
economic downturn might be expected, similar to that following
the September 11, 2001 attacks in the United States.

"The market is interpreting this as a re-acceleration in
al- Qaeda activity which could lead to global economic
slowdown," said Deborah White of SG Securities.

"If this is our 9/11 then the market will sell off very
heavily on that," said Nigel Saperia of trading house Glencore.

Earlier oil set new records on the approach of a hurricane
toward U.S. Gulf oil production and refining facilities.

Tropical Storm Dennis was upgraded on Wednesday to become
the season's first Atlantic hurricane as it moved through the
central Caribbean, putting it on track for the oil and natural
gas fields off the Gulf Coast on Sunday, the National Hurricane
Center said.