* No visible signs of damage to U.S. refineries from Ike
* Lehman, Merrill Lynch roil markets, spur flight to quality
* Oil falls to seven-month low around $94 a barrel
(Recasts, updates prices)
By Matthew Robinson
LONDON, Sept 15 (Reuters) - Oil plunged $7 on Monday as
investors fled to safer havens, due to turmoil in the U.S.
financial system, and on early signs Hurricane Ike had spared
key U.S. energy infrastructure.
Lehman Brothers' <LEH.N> filing for bankruptcy protection
and Bank of America's <BAC.N> agreement to buy Merrill Lynch
<MER.N> stirred concerns that mounting global economic problems
would slow energy demand further, sending investors out of oil.
[]
U.S. crude <CLc1> dropped $7 to $94.18 barrel at 1135 GMT,
the lowest level in seven months. U.S. oil dropped below $100
briefly on Friday for the first time since early April, and
trade was open for a special session on Sunday due to Hurricane
Ike.
London Brent crude <LCOc1> fell $5.88 to $91.70 a barrel.
Energy firms rushed to offshore facilities and coastal
refineries to check for damage on Sunday after Hurricane Ike's
direct hit on the Houston energy hub left a quarter of U.S. oil
and refined fuel production idled and millions without power.
Early reports from emergency officials and oil companies
indicated little or no severe damage to energy infrastructure --
signalling a possible quick recovery to production -- though
near-term supply problems were expected. []
"The sell-off is partly because Hurricane Ike hasn't done
significant structural damage to oil facilities as well as
growing concerns about the economy," said David Moore,
commodities strategist for Commonwealth Bank of Australia.
"It has been quite a spectacular turn of events at Lehman
and Merrill and the stresses in the financial system are
sparking concerns about economic outlook and how that will weigh
on global energy demand."
High fuel prices and wider economic problems have dragged
down oil demand in the United States and other large consumer
nations, sending crude prices from a record high over $147 a
barrel in July.
Surging demand from emerging economies like China launched
oil on a six-year rally, with additional support coming this
year as investors rushed into oil as a hedge against inflation
and the weak dollar.
The U.S. dollar sank even as crude tumbled on Monday, with a
broad flight from risk igniting U.S. Treasury debt, gold and the
low yielding Japanese yen. []
"The oil and dollar story seems to have changed," said
Michael Davies, analyst at Sucden. "While the flight to quality
has seen gold move up today, oil doesn't seem to be getting used
as a hedge at the moment, as the sentiment in the market is
still bearish."
China's central bank cut the cost of bank loans for the
first time since Feb. 2002 to prop up the slowing economy.
[]
Militants in OPEC member Nigeria attacked a Royal Dutch
Shell <RDSa.L> oil installation on Monday in a third day of
heavy fighting with security forces. []
(Reporting by Matthew Robinson and David Sheppard in London,
Fayen Wong in Perth, editing by Anthony Barker)
