Oil price drops fast as Goldman charges hit confidence

The oil price has dropped sharply for a second day as fraud charges filed in the US against Goldman Sachs bank on Friday shake investor confidence.

US light crude oil fell by more than $2 a barrel, or 2.4%, to $81.23. London Brent oil fell by the same amount, to $81.98 a barrel.

The price of oil has now fallen by more than $4 a barrel since Thursday.

Concerns about reduced fuel consumption by airplanes due to the Icelandic volcano have also hit prices.

Planes across Europe were prevented from flying for a fifth day on Monday due to volcanic ash in the atmosphere.

"It is hard to calculate the total effect of the volcano-related shut down of air traffic, but the net effect is probably in the region of 0.5-1 million barrels a day less oil demand. This is a massive amount," said Torbjorn Kjus at DnB NOR Markets.

There is also a general feeling that the oil price has been over-inflated in recent weeks, analysts said.

"Markets got ahead of themselves with oil prices above $85, which was fundamentally not justified, so there are plenty of reasons to be rather cautious down the road," said Carsten Fritsch at Commerzbank.

The price of oil hit an 18-month high of more than $87 a barrel earlier this month.

On Friday, US financial regulator the Securities and Exchange Commission (SEC) charged banking giant Goldman Sachs of defrauding investors.

The claims concern Goldman's marketing of certain mortgage investments just as the US housing market faltered.

Goldman has rejected the SEC's allegations, saying that it would "vigorously" defend its reputation.

Tjeck prices here in realtime