Oil Down $2, Speculators Bet on Kerry Win

[unfrigginreal]

LONDON (Reuters) - Oil prices fell heavily on Monday, taking U.S. crude below $50 on speculation that a U.S. election win for Senator John Kerry could soothe the geopolitical friction that helped spark this year's crude rally.

U.S. light crude (CLc1: Quote, Profile, Research) by 1545 GMT (11:45 a.m. EST) was off $1.96 at $49.80 a barrel, after spending nearly a month above $50. London Brent (LCOc1: Quote, Profile, Research) lost $2.18 to $46.80 a barrel.

European and U.S. winter heating fuel futures, the driving force behind the latest leg in oil's record rally, fell even more sharply than crude. London gas oil lost $23.75 to $422 a ton and U.S. heating oil dipped 6.31 cents to $1.401 a gallon.

Energy analysts said a win for the challenger Kerry in Tuesday's U.S. poll could mean lower crude prices than if President Bush is re-elected. Most opinion polls put Bush narrowly ahead.

"Under a Kerry administration we'd likely have a much more interventionist SPR (Strategic Petroleum Reserve) policy," said Jamal Qureshi, market analysts at PFC Energy in Washington.

"And when you look out a bit further, Bush is more likely to be aggressive in the Middle East, particularly in Iran."

PFC is forecasting an average U.S. crude price of $43 a barrel in 2005 should Kerry win, compared to $48 in the event Bush triumphs.

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