EnergyOil prices shed 2.5 per cent yesterday, recovering from a much heavier initial fall, as dealers calculated the potential economic fall-out from attacks in central London. US crude by late in the afternoon was trading down $1.68 at $59.60 a barrel.
Earlier, crude fell almost $5 from a new record high of $62.10, touching an intraday low of $57.20 as it became clear the blasts on London's transport system were deliberate.
London Brent crude fell to a low of $55.55 before recovering to $58.18 a barrel, down $1.63 on the day.
Some analysts said the attacks raised the prospect of an economic downturn, similar to that following the September 11th, 2001, attacks in the United States.
"The market is interpreting this as a re-acceleration in al-Qaeda activity which could lead to global economic slowdown," said Deborah White of SG Commodities.
"The bombing in London highlights global growth concerns and any slowing of demand would be considered quite bearish," said Kyle Cooper, an analyst with Citigroup in Houston.
Others said the impact was likely to be short-lived.
"It is not 9/11 in its devastation or its impact on global demand," said Nauman Barakat, senior vice president at brokers Refco. "Therefore this sell-off will be very temporary".
A rise in US stocks of distillate fuels, including heating oil and diesel, also helped undermine prices.
Distillate inventories rose four million barrels to 117 million barrels in the week to July 1st on high refinery run rates, the US government's Energy Information Administration said.
