Oil sinks on Dubai debt concerns
Crude prices fall more than 2% as investors move into safer assets after Dubai World requests an extension on $60 billion in debt payments.
 |
| Click chart for current prices. |
NEW YORK (CNNMoney.com) -- Oil futures sank more than 2% on Friday as investors worried about Dubai World's debt woes and moved into safe-haven assets including the dollar.
Crude oil for January delivery fell $1.91, or 2.45%, to $76.05 a barrel.
"Money market players are generally moving away from risk, and much of that for now is due to uncertainty over the financial systems, specifically in reference to Dubai," said Brenda Sullivan, head of research at Sucden Financial in London.
Dubai World, the state-owned investment firm, requested an extension on $60 billion in debt payments and triggered credit concerns across world financial markets. The debt was used to feed a construction boom, but the Middle East country was challenged by a real estate crunch. (See correction below).
"A delay of repayments from Dubai World wouldn't necessarily affect crude oil production, however it would impact the sentiment on financial stability and the financial strength of a number of different institutions," Sullivan said. "There have been reports of exposure by a number of banks, specifically HSBC and Standard Chartered among others that may have exposure to financial instruments related in Dubai World."
Dubai's move threatened Wall Street's confidence, and U.S. stocks were set to open lower Friday after ending higher Wednesday. U.S. markets were closed Thursday for the Thanksgiving holiday.
Oil was also weakened by a stronger dollar. The greenback gained ground Friday versus its rivals, after sliding to a 15-month low Wednesday.
Crude oil, like other commodities, is priced in dollars, and a stronger buck weighs on prices.
Gasoline prices. The national average price for a gallon of regular unleaded gas decreased to $2.632, down one tenth of a cent from the previous day's $2.633, according to motorist group AAA. This is the fifth consecutive decline.
An earlier version of this article incorrectly described Dubai World. 
-
Silver lining of the housing bust: A protectionist group was able to buy the land around the iconic sign. More -
Trains of the future are likely skipping you. Despite grand government plans, funding is small. More -
Broadway star Scarlett Johansson is selling her L.A. pad for $2 million less than she paid. More -
Former Merrill Lynch CEO John Thain is being asked to work his magic on small business lender CIT. More -
Lenders are collecting from owners like Vanessa Corey even after a short sale or foreclosure. More -
The $10 electronic hamsters were last year's monster hit. Meet the encore. More
