SINGAPORE – Oil prices were steady near $96 a barrel Tuesday in Asia after plummeting overnight as investors weighed the fallout from U.S. lawmakers' rejection of a proposed $700 billion bank bailout aimed at stabilizing the teetering U.S. economy.
After an overnight plunge, light, sweet crude for November delivery was up 33 cents to $96.68 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.
Oil prices sank $10.52 to settle at $96.36 Monday amid worries that the financial crisis would drag on global growth and demand for oil. That was the second-largest drop in dollar terms and the biggest percentage-wise since 2001.
In the last seven drays, crude has now fallen almost $25, or 20 percent.
"Yesterday's reaction was justified. There's a lot of anxiety in the market," said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne. "I think the market will now likely take a wait-and-see approach until a new emergency package emerges."
Investors were stunned by the U.S. House of Representatives' rejection Monday of the bank bailout plan. On Wall Street, the Dow Jones industrials plunged 777 points, the most ever for a single day. Officials scrambled to structure a new bailout proposal that would attract reluctant lawmakers and still soothe the unnerved financial markets.
"The general trend remains very negative," Pervan said. "Even with a new package, conditions remain weak for commodities."
Pervan said oil futures will likely fall to $80 a barrel over the next six months and may reach as low as $60.
Investors are keeping a close eye on the dollar. Investors often buy crude futures as a hedge against a weakening dollar and inflation, and sell when the dollar strengthens.
The 15-nation euro was steady Tuesday at $1.4362 while the dollar rose to 104.46 yen from late New York trading, but down from above 106 yen on Monday.
In other Nymex trading, heating oil futures were steady at $2.76 a gallon, while gasoline prices were little changed at $2.39 a gallon. Natural gas for November delivery was steady at $7.22 per 1,000 cubic feet.
In London, November Brent crude fell 56 cents to $93.42 a barrel on the ICE Futures exchange.