Crude prices dip below $88 amid global market sell-off

NEW YORK, Oct. 6 (Xinhua) -- Crude prices dipped below 88 U.S. dollars a barrel, the new low in the past eight months, amid global sell-off on fears that financial crisis could lead to a recession to curb oil demand.

Light, sweet crude for November plunged 6.07 dollars to settle at 87.81 dollars a barrel on the New York Mercantile Exchange. London Brent crude fell 6.45 dollars to 83.80 dollars a barrel.

"The price of oil continued on its significant decline and even broke some key support levels when it traded below 90 dollars per barrel," Wall Street Strategies' senior research analyst Conley Turner told Xinhua.

"The fall is being attributed to the fact the current financial crisis is causing a lot of market participant to sell the commodity on the outlook that the world wide demand for the commodity will be cut sharply in the short term," said Turner.

Crude prices have declined from a peak of 147.27 dollars a barrel set on July 11 as high prices and the spreading financial crisis curb oil consumption.

Crude prices retreated as China, the world's second biggest consumer, will not import gasoline for the second straight month and instead export the fuel due to heavy domestic stockpiles and a dip in demand.

"With demand for oil dropping, so have the prices of commodities in general and that is bringing down the price of anything even remotely related," Turner pointed out.

"Public sentiment about the U.S. economy is taking a turning for the worse and this is having an adverse impact on all aspects of the markets which in turn is driving down equity prices," he added.

Wall Street plunged Monday, with the Dow Jones industrial average diving more than 800 points and trading below 10,000 for the first time in four years amid a global heavy sell-off on fears that the credit crisis would drag the economy into recession.

Europe's stock markets also suffered black Monday with the FTSE-100 down 5.77 percent, Germany's DAX down 7.07 percent, and France's CAC-40 down 9.04 percent.

"The fact that the global economy appears to be slowing poses additional downside risks for the United States. In fact, it is these adverse factors taken in aggregate that are serving as offsets to any positive gains to the U.S. economy due to the falling price of oil," said the analyst.