Oil Drops Below $92 Per Barrel In Asia

September 16, 2008 9:31 a.m. EST

Singapore (AHN) - Oil prices dropped below $92 per barrel in Asia on fears the U.S. credit crisis will have a lingering effect on global economy and stunt growth that would cause demand for crude to decline.

Light, sweet crude for October delivery shed $3.77 to close at $91.94 a barrel in electronic trading on the New York Mercantile Exchange midday in Singapore. The contract dropped $5.47 since Monday's close to settle at $95.71, the first time oil traded below $100 since March 4.

The decision of the Organization of Petroleum Exporting Countries to reduce production by 520,000 barrels last week failed to arrest to continued decline in oil prices. OPEC wants oil prices to remain steady at $100 per barrel.

Economic slowdown in the U.S. has reduced demand by at least 800,000 barrels a day in August.

The collapse of banking giant Lehman Brothers Holdings, Inc. on Monday, sent shock waves in financial markets across the globe, triggering a domino effect on the oil industry as investors fear this could lead to more economic slowdown across the globe.

Jonathan Kornafel, director for Asia market maker Hudson Capital Energy in Singapore said, "People are selling everything. It's a bit of panic. We may not have seen the end of demand destruction. It's scary what going on economic-wise right now, and that's why oil is selling off."