Oil fell over 4 percent to a seven-month low on Tuesday, sliding for a second day as Lehman Brothers' collapse raised concern the credit crisis will hurt the economy and undermine fuel demand.
Reports that Hurricane Ike caused minor damage to U.S. oil platforms and refineries also weighed on the market, adding to the previous session's decline of more than $5.
"If the economic turmoil continues, demand will continue to drop," said Jonathan Kornafel, Asia Director at U.S.-based options trader Hudson Capital Energy. "It's a bit of panic in the markets."
U.S. crude for October which fell as much as $4.17, was down $3.41 at $92.30 a barrel by 4:26 a.m. EDT. The market has fallen over 37 percent from the record high of $147.27 reached in July.
Brent crude for November fell $3.36 to $90.88 a barrel at the same time, having slumped by as much as $4.44 to touch the lowest price for a nearby month since February 8.