The shock rejection of the Administration's proposed financial market bail out is flowing through to other markets including to commonities. Oil is back 10%. This from Reuters
Oil prices dropped nearly 10 percent overnight after the US House of Representatives rejected the US$700 billion rescue package for the financial sector.
US stocks plunged after lawmakers voted against the bailout and major US and European banks needed emergency deals to stave off collapse, sending investors fleeing to the safety of gold and debt.
US November crude settled down $10.52 to $96.37 a barrel, after touching a session low of $95.04, in the second biggest drop since April 23, 2003. November crude dropped 11.8 percent last Tuesday following a spike in the expiring October crude contract in the previous session.
London Brent crude traded down $9.56 to settle at $93.98 a barrel.
The House voted 228-205 to reject the bailout bill, which would have authorized the Treasury Department to purchase broken mortgage-backed bonds from banks with the goal of jump-starting stalled capital markets.
"The bailout package being defeated sent stock markets tumbling, weighing on petroleum as well," said Tom Bentz, analyst at BNP Paribas Commodity Futures Inc.
The mounting economic crisis has stirred concerns about oil demand, helping drag prices from a record high above $147 a barrel in July.
In addition, investors who had rushed into commodities earlier this year as a hedge against inflation and the weak dollar have sold crude for safer havens.
"This decision is a shock to the system," said Sarah Emerson, director of Energy Security Analysis Inc. "The oil market is reacting strongly in part because of the implications of a weak economy on demand."
