Oil falls after U.S. Senate bailout vote

By Maryelle Demongeot

SINGAPORE (Reuters) - Oil fell towards $98 a barrel on Thursday after the U.S. Senate's approval of a $700 billion (396 billion pound) bailout of the U.S. financial industry failed to lift concerns over weakening demand and growing supplies in the U.S.

The package for Wall Street, which has yet to be approved by the House of Representatives, rekindled hopes that the credit crisis can be eased, but traders and analysts said the supportive impact would be limited as eyes remained on falling demand.

U.S. light crude for November delivery fell 21 cents to $98.32 by 7:37 a.m. BST, having risen as high as $100.37 before the vote. It settled down $2.11 at $98.53 on Wednesday when U.S. government data showed supplies rising and on a firmer dollar.

London Brent was down 24 cents at $95.09.

"Once the bill is finally approved, I would expect crude oil to sell off. In the short term, I would look for us to head for the low $90s," said Jonathan Kornafel, Asia Director, Hudson Capital Energy Singapore.

"We may move higher today or tomorrow, but in the fourth quarter of 2008 and first quarter of 2009, I would expect crude to trend lower," he added.

Oil prices have tumbled from record highs above $147 a barrel in July on signs of slowing oil demand from industrial economies.

Pressure has also come as investors sell oil and other commodities and move cash into safer investments amid turmoil in financial markets.