Oil prices dropped by 3% this evening as the reduction of the United States's top-tier credit rating by Standard & Poor's hammered markets and stoked concerns of an economic slowdown.
The move by S&P added to concerns about demand in the world's top oil consumer, which has seen petrol use fall in the midst of the summer driving season when demand usually peaks.
Brent crude fell $3.20 to $106.17 a barrel, while US crude dropped $3.25 to $83.63 after earlier sliding to $82.52, its lowest intra-day level since November.
While analysts warned oil prices could fall further still if a second recession takes hold, both Merrill Lynch and Goldman Sachs maintained their 2012 price forecasts.
'We believe that WTI (US) crude oil prices could briefly drop to $50 under a recession scenario,' Merrill Lynch said in a note, but it maintained its 2012 average forecast for US crude at $102 a barrel and its forecast for Brent next year at $114.
