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Oil prices decline

NEW YORK: Oil prices fell sharply on Monday, pulling back at least temporarily from record levels as investors feared that the financial crisis that forced the sale of Bear Stearns is a sign of deep economic troubles.

Light, sweet crude for April delivery fell $3.08 to $107.13 a barrel.

Oil’s steep decline came hours after futures rose to a new trading high near $112 a barrel on the Federal Reserve’s surprise Sunday move to lower a key interest rate by a quarter point. In the past several months, Fed rate cuts have fuelled rallies in oil prices.

Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak. Interest rate cuts, and even the prospect of future cuts, tend to weaken the dollar further.

Investors received more bad news about the economy when the Federal Reserve released data on Monday morning that showed the nation’s industrial output dropped by 0.5 per cent in February, the biggest decline since October. — AP

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