WTI drops to near $91 per barrel

Crude oil prices fell steeply again Tuesday on the likelihood that demand will continue to decline as the US economy worsens and the global economy weakens along with it.

Among the issues worrying investors, aside from demand decline itself, are the bankruptcy of Lehman Brothers (NYSE: LEH), the deepening troubles of US insurer American International Group (NYSE: AIG), which had its credit rating cut by Standard & Poor’s and Moody’s Investors Service today, and today’s decision by the Federal Reserve to hold US interest rates steady at 2 percent rather than cutting them as had been expected by many.

October contracts for West Texas Intermediate crude were down $4.37 to $91.34 per barrel on the New York Mercantile Exchange, taking the front-month contract $55 lower than its peak in July above $147 per barrel, while Brent crude dropped $3.92 to $90.33 per barrel on the ICE Futures Europe exchange in London.

In afternoon trade, Nymex gasoline October gasoline was down 14 cents to $2.42 per gallon while November heating oil fell 7 cents to $2.72 per gallon and October natural gas dropped 6 cents to $7.31 per million British thermal units.

An attack on an oil facility in Nigeria, resulting in one death and several injuries, did not seem to affect prices.