Crude prices sharply lower in Asian trade

SINGAPORE: Crude prices were sharply lower in Asian trade Monday as market confidence took a knock after Standard and Poor's downgraded the US credit rating, analysts said.

At 0200 GMT, New York's main contract -- light sweet crude for September delivery -- was down $2.34, or 2.69 percent, to $84.54 a barrel, from its closing price on Friday. Brent North Sea crude for September delivery sank $2.80, or 2.56 percent, to $106.57.

"What we do feel is the re-rating of the debt in the US has knocked confidence out of the market," said Jonathan Barratt, Sydney-based managing director with Commodity Broking Services.

"With crude where it is at the moment, that confidence will affect demand or expectations of demand in the market," he told.

The United States, the world's largest oil consumer, saw its top-flight AAA credit rating downgraded for the first time when Standard and Poor's on Friday cut it to AA+ with a negative outlook on concerns over its debt.

US Treasury Secretary Timothy Geithner on Sunday fiercely criticised the rating agency's move, saying the world's largest economy remained strong and resilient. "I think S&P has shown really terrible judgment and they've handled themselves poorly, and they have shown a stunning lack of knowledge about basic US fiscal budget math, and I think they came to exactly the wrong conclusion," Geithner said in an interview.

"There is no risk the US would never meet its obligations. We've got some challenge ahead of us, but we'll be able to work through the challenges. We'll get through this." (AFP)