Oil falls below USD 104 per barrel

Benelux governments stepped in to rescue Belgian-Dutch banking group Fortis and Britain nationalised mortgage lender Bradford & Bingley.

In Washington, Congress prepared to vote on a $700 billion Government rescue for the financial sector.

US light crude for November delivery fell $3.43 to $103.46 a barrel by 0943 GMT, adding to Friday's losses of $1.13.

London Brent crude fell $3.22 to $100.32.

"There are two factors at play here," said Jonathan Kornafel, Asia director of Hudson Capital Energy in Singapore.

"One is the short term effect of a rally in the US dollar and second is ongoing concerns about US demand and elsewhere," he said. "I think the demand destruction will be significant enough to cut quite deeply into Oil prices.".

US congressional leaders from both parties said they had reached a tentative agreement on Sunday and prepared to vote on the rescue plan on Monday.

Questions remain over the plan's ability to restore confidence to shaky markets and head off a deep recession.

"From a commodity perspective, our more pressing concern is to what extent the US virus spreads globally and specifically to China," said Deutsche Bank in a research note.

"We expect demand destruction fears into early 2009 will bear down on many commodity prices."

Falls in demand in the United States and other developed economies have contributed to the market's retreat from record highs above $147 a barrel in July.

Analysts said mounting evidence of an economic slowdown in the United States, Europe and Japan would continue to weigh on prices.

"While supply-side uncertainty suggests a floor near $100, the economic context for this quarter and next is weak, suggesting price rallies will be capped and/or sold into," Harry Tchilinguirian, a senior oil market analyst at BNP Paribas, said in a research report.

The slow pace of recovery, following shutdowns due to hurricanes, in oil and gas production in the US Gulf of Mexico, home to a quarter of US output, could offer some support for prices in the short term.

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