SINGAPORE (AP) -- Oil prices fell below $108 a barrel Tuesday in Asia in a choppy market driven by uncertainty about whether a $700 billion U.S. plan to buy bad mortgage debt will stabilize the financial system.
Oil prices had surged Monday in volatile trading, spiking more than $25 a barrel at one point, as investors fled to oil amid unease about the mammoth bailout plan.
"People are looking for a safe haven," said Gerard Burg, a minerals and energy analyst with National Australia Bank in Melbourne. "With all the volatility we've seen in the price, I don't know how much of a safe haven oil really is."
Light, sweet crude for November delivery was down $1.96 to $107.41 a barrel in electronic trading on the New York Mercantile Exchange midafternoon in Singapore. The contract jumped overnight $6.62 to settle at $109.37.
The October contract, which expired Monday, surged as much as $25.45 to $130 a barrel before falling back to settle at $120.92, up $16.37.
The Bush Administration and congressional leaders are negotiating the proposal, which would rescue financial firms from hundreds of billions of debt that plummeted in value when housing prices began to fall in 2006.
The Treasury Department's first draft said that only mortgage-related assets would be purchased. But in a later version, the Treasury secretary asked for the power to expand purchases to troubled assets beyond real estate.
That would conceivably leave taxpayers picking up the tab on things like bad car loans and credit card debt.
Democrats are calling for the measure to limit pay packages for executives of companies helped by the bailout and to allow judges to rewrite mortgages to lower the monthly payments of bankrupt homeowners.