* Global economic turmoil stirs demand concerns
* U.S. crude, fuel inventories rise
* Investors sell commodities, seek safer havens
(Recasts, updates prices, market activity)
NEW YORK, Oct 2 (Reuters) - Oil dropped more than 4 percent
on Thursday as financial market turmoil stoked concerns about
fuel demand and sent investors seeking safer havens.
U.S. crude <CLc1> settled down $4.56 at $93.97, while
London Brent <LCOc1> fell $4.77 to settle at $90.56 a barrel.
Shockwaves from the global credit crisis spread,
threatening industry and jobs worldwide and pressuring the U.S.
Congress to finish up a $700 billion bailout of the U.S.
financial sector. []
The growing financial crisis has added to concerns about
oil demand, which has slumped in industrialized countries like
this United States this year, sending crude prices crashing
from record highs over $147 a barrel hit in July.
"People are worried about demand deterioration (and) the
economy falling into recession," said Tom Knight, trader for
Truman Arnold.
U.S. stocks plunged as reports on unemployment claims and
factory orders added to worries about the economy of the
world's top energy consumer.
Additional pressure on crude prices came as investors --
who had flocked to crude and other commodities earlier this
year as a hedge against the weak dollar and inflation --
unwound positions.
"We are continuing to see funds unwinding positions. This
has not only affected speculators but also the commercial side
of the trade in view of problems related to credit
constricting," said Gene McGillian, analyst for Tradition
Energy.
Dollar gains against the euro and other currencies also
helped push down crude. U.S. government data showing rising
inventories of crude, gasoline and natural gas as oil
infrastructure recovered from Hurricane Ike, also weighed on
prices. []
BAILOUT WAIT
The fate of the U.S. rescue plan, passed by the Senate
74-25 on Wednesday night, now lies with the House of
Representatives, which is expected to vote on the bill on
Friday.
The House rocked global markets on Monday by rejecting an
earlier version of the bailout.
"The passage of the bailout package might be a short-term
boost to the market as it injects a little bit of confidence
that some problems may be solved as the government absorbs the
problem debts from banks," said McGillian.
"This will reverse the current strength of the dollar and
for some that means a move up for oil, but I don't see this
holding for long because we have to deal with demand here,
which is deteriorating."
(Reporting by Matthew Robinson, Gene Ramos and Robert Gibbons
in New York, Jane Merriman in London and Maryelle Demongeot and
Annika Breidthardt in Singapore; Editing by Christian
Wiessner)
