(Updates prices falling below $96, recasts lead)
* Oil falls below $96, extends 10 percent loss
* U.S. lawmakers reject $700 billion bailout
* U.S. Gulf infrastructure still recovering
By Fayen Wong
PERTH, Sept 30 (Reuters) - Oil extended losses below $96 a
barrel on Tuesday, after slumping almost 10 percent in the
previous session as fear gripped financial markets in the wake
of U.S. lawmakers' shock rejection of a $700 billion rescue
plan.
Asian stocks opened sharply lower after Wall Street's
biggest fall since the crash of 1987, and were down roughly 4
percent amid mounting fears about the health of the global
economy, with China's two biggest banks opening more than 8
percent lower. []
U.S. light crude for November delivery <CLc1> fell 59 cents
to $95.78 a barrel by 0233 GMT, after dropping $10.52 on Monday
to $96.37 -- the second biggest fall since April 23, 2003.
London Brent crude <LCOc1> fell 62 cents to $93.36.
"It was a surprise that Congress rejected the bailout and
it's just reinforcing the belief that the U.S. economy is
really heading towards a downward spiral. That means the demand
side of the equation for oil will deteriorate rapidly," said
Toby Hassall, chief analyst at Commodity Warrants Australia in
Sydney.
"It's just getting worse and worse and no one knows when
this is going to end."
Oil has fallen about 35 percent since its $147 peak in
mid-July, amid signs that high energy prices and the U.S.
financial crisis have cut into crude demand in the United
States and other industrialised nations.
In addition, oil has also been dragged down as investors,
who had rushed into commodities earlier this year as a hedge
against inflation and the weak dollar, sold crude for safer
havens.
The House voted 228-205 to reject the bailout bill, which
would have authorized the Treasury Department to purchase
broken mortgage-backed bonds from banks with the goal of
jump-starting stalled capital markets. []
Analysts said the spread of credit problems to Europe was
also stoking fears that the financial turmoil, which started
with risky lending to the overheated U.S. property market, had
gone rapidly global.
"Slower international economic growth is bound to dent oil
demand," said David Moore, a commodities analyst at the
Commonwealth Bank of Australia.
Separately, oil and gas production in the Gulf of Mexico
continued to increase on Monday as companies brought their
facilities back on line after Hurricane Ike, the Minerals
Management Service said.
Some 48 percent of U.S. oil production in the Gulf of
Mexico and 47.4 percent of the region's natural gas output
remained shut, down from 57.4 percent and 52.8 percent
respectively on Friday.
(Additional reporting by Maryelle Demongeot in Singapore;
Editing by Michael Urquhart)
