London, September 26:

Oil prices fell by nearly three dollars today, reversing recent gains after hopes were dashed that the US Congress was about to pass a massive financial bailout package, dealers said.

New York’s main contract, light sweet crude for November delivery, fell $2.96 dollars to $105.06 dollars per barrel. London’s Brent North Sea crude for November shed $2.68 to $101.92 dollars.

Fresh uncertainty emerged over whether the US bailout plan would receive Congressional approval, which helped to pull prices lower. “The oil market is disappointed that talks failed and expects that demand for oil would decline as the US economy heads towards recession,” said Dresdner Kleinwort analyst Peter Fertig.

“Crude oil futures were down heavily as markets remained on edge as the US government’s $700-billion-dollar bailout plan remained uncertain,” said Sucden analyst Michael Davies.

He added: “News that Washington Mutual was shut down by US authorities, in what is the US’s largest ever bank failure, also killed confidence.” Oil prices jumped by more than two dollars yesterday, with signs that the massive US government bailout was nearing approval which would lessen the risk of an economic collapse of the world’s biggest energy consumer.