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UPDATE 8-Brent dips below $100 a barrel on Greece fears

Published 10/04/2011, 08:39 AM

* Goldman cuts 2012 Brent forecast to $120/bbl from $130

* Oil, equities, euro sharply lower on recession fears

* Libya restoring oil output faster than expected

* Coming Up: API weekly oil stocks data; 2030 GMT (Adds U.S. light crude lows, updates prices)

By Zaida Espana

LONDON, Oct 4 (Reuters) - Brent crude futures dipped below $100 a barrel on Tuesday, as worries that a Greek debt default could spread across the banking system and threaten the global economy showed no signs of abating.

Brent crude for November delivery was trading $2.16 lower at $99.55 by 1223 GMT, having hit an intraday low of $99.32 a barrel earlier in the session. Brent last fell under $100 on Aug. 9.

U.S. crude futures fell $2.40 to $75.21 a barrel after reaching an intraday low of $74.95, levels not seen since late September 2010.

A Brent price forecast downgrade from typically bullish commodity forecaster Goldman Sachs sounded another note of caution for investors. The investment bank cut its 2012 Brent crude forecast to $120 a barrel from $130 a barrel, joining a growing chorus of increasingly bearish analysts.

"The market continues to focus on the risk of a new economic recession, triggered by the stress on the European financial and banking system," Goldman Sachs analysts said, noting that the financial stress in Europe will continue to present headwinds to economic and oil demand growth next year.

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Stock markets hit a fresh 15-month low on Tuesday, while the euro and base metals tumbled this week on mounting worries the debt crisis in Greece will unleash a global recession.

Concern about Greece's ability to avert a default, as negotiations about a second bailout inched ahead, spooked equity markets after the country admitted it would miss its deficit targets.

"If our economists are correct in their bearishness, then the macro gloom will eventually make itself felt in the oil markets via weak product demand and low refining margins that undermine crude demand and drive spreads lower," Citigroup oil analysts said in a note to clients.

Tony Nunan, a Tokyo-based risk manager at Mitsubishi Corp., said: "I think more people are getting more afraid,"

"There's a concern that there will be a mini financial crisis. If they don't do it properly, it will cause some banks in Europe to fail, and there will be a domino effect," he said, referring to European leaders' efforts to resolve Greece's financial crisis.

The deepening crisis has forced investors to seek safe havens such as gold and Treasuries, which has helped push the U.S. dollar to its highest in more than eight months against a basket of major currencies.

A stronger dollar can pressure dollar-denominated commodities prices by making them more expensive for consumers using other currencies.

OPEC EYES PRICES, LIBYA TURNING TAP ON

On the supply front, Qatar did not see a need for the Organization of the Petroleum Exporting Countries to meet before its next scheduled gathering in December, although it is closely watching the impact on oil demand of slowing economic growth and the debt crisis in Europe, Energy Minister Mohammed al-Sada said in Tokyo.

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Analysts said Brent could also come under further pressure as Libyan output may be restored faster than expected after the conflict there.

Libya will start pumping crude at two major oilfields in about two weeks, doubling production to 700,000 barrels a day by year-end, the head of its National Oil Corp., Nouri Berouin, told Reuters.

While the resumption in operations at the Repsol-operated Sharara field and Eni's part-owned Elephant will help boost output, Berouin said Libya's biggest oil terminal at Es-Sider may take more than a year to be fully repaired.

U.S. commercial crude stockpiles are expected to have risen for a second week as imports continued to increase, a preliminary Reuters poll of analysts found on Monday.

Industry group the American Petroleum Institute will release its weekly inventory report at 2030 GMT. The Energy Information Administration will issue its own stocks data on Wednesday. (Additional reporting by Seng Li Peng and Randy Fabi in Singapore; editing by Anthony Barker)

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