Oil prices crumble as global economic outlook dims

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Oil prices fall as global demand concerns resurface after hurricane worries subside

Oil prices tumbled more than $8 Tuesday to levels last seen five months ago as investors shifted their focus from hurricanes in the Gulf of Mexico to slowing global demand.

By afternoon in Europe, light, sweet crude for October delivery was down $8.06 a barrel to $107.40 in electronic trading on the New York Mercantile Exchange. The last time prices hovered in that range was in early April before a historic run-up above $147 per barrel. Earlier in the session prices had dropped as low as $105.46.

On Friday, the contract settled at $115.46 a barrel as Gustav approached the U.S. Gulf coast, a key region for oil drilling and refining. But traders were relieved that Gustav weakened as it neared the offshore oil rigs and Louisiana refineries, and appeared to have caused less damage than expected in New Orleans and surrounding areas.

As Hurricane Gustav petered out, traders quickly turned their attention to slowing global economic growth, speculating that demand for crude will be dampened even in rapidly expanding China and India.