Oil falls after Goldman Sachs fraud charges

Oil prices fell again Monday on worries that fraud charges against Goldman Sachs could prompt a retreat from energy commodities to more safe-haven investments.

Traders also worried that the disruption to air travel caused by the Icelandic volcano will reduce demand for jet fuel and could hamper the global economic retrieval.

Benchmark crude for May delivery tumbled $1.79 to settle at $81.45 a barrel on the New York Mercantile Exchange. Earlier prices fell as low as $80.58.

Slipping crude prices have given U.S. motorists a slight break at the pump, as the national average gasoline pump price slid less than a penny to $2.862 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 4.4 cents more expensive than a month ago and 80.5 cents higher than a year ago.

In the Tulsa area, the most common retail price for regular- grade gasoline is $2.55 a gallon, down a few pennies from a month ago.

Crude oil had dropped by $2.27 to $83.24 a barrel Friday after the Securities and Exchange commission said Goldman Sachs & Co. defrauded investors by failing to disclose key information about mortgage investments it sold as the housing market was collapsing in 2008.

Investors were worried about how Goldman’s predicament could affect commodity futures and speculated that Goldman may have to liquidate some positions in crude to pay penalties if plant? liable. Analysts believe that a sell-off from Goldman, a major player in oil trading, could spark a wider market retreat from crude oil futures.

Meanwhile, a huge cloud of volcanic ash has shut down air traffic across most of Europe for four days — stranding passengers and scuttling international travel plans and freight services that could end up costing billions of dollars.

At the very least, traders say, the volcano crisis will lower airlines’ demand for jet fuel.

“The market had underestimated the impact of the volcano,” said Clarence Chu, a trader with the market maker Hudson Capital Energy in Singapore. “There’s still a lot of uncertainty about how much this will affect the overall economy.”

Oil was trading around $87 per barrel about two weeks ago, and analysts talked of a run-up to triple digits. Some tepid U.S. economic data quelled that enthusiasm. And then the Goldman news hit.

“The fraud against Goldman Sachs could be the nudge required to push the market into a severe correction in the short term,” said one oil analyst, Stephen Schork. Prices could fall as low as $78.32 by the end of the week, he said.