Sept. 16 (Bloomberg) -- Crude oil tumbled, dipping below $91 a barrel and taking its two-day decline to more than $10 on concern that turmoil on Wall Street may weaken the global economy and reduce demand.

Oil fell more than 5 percent today after American International Group Inc. had its credit rating cut, threatening efforts to raise funds to keep the insurer afloat, and Lehman Brothers Holdings Inc. yesterday sought bankruptcy protection.

``The fear is that the sharp deterioration of the banking crisis in the U.S. will spread to the real economy and demand for oil,'' said Carsten Fritsch, a Commerzbank AG analyst in Frankfurt. ``There's a good possibility prices will fall further before they stabilize.''

Crude oil for October delivery fell as much as $4.88, or 5.1 percent, to $90.83 a barrel, the lowest intraday price since Feb. 8. It was at $91.88 at 1:50 p.m. London time on the New York Mercantile Exchange.

Oil has declined 4.5 percent this year and dropped 38 percent from the record $147.27 a barrel reached on July 11.

Gasoline for October delivery fell for a second day, declining as much as 9.03999 cents, or 3.5 percent, to $2.471 a gallon in New York.

The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world's oil, lowered its forecast for 2009 oil demand to 87.66 million barrels a day because of the global economic slowdown.

The group ``will take action if they see continue pressure for prices to fall below $80,'' John Sfakianakis, chief economist at Saudi British Bank said in an interview in London today. ``I think they are more than fine if prices stay around $80-90 in the next few months.''

Lehman Suspended

CME Group Inc., the world's largest futures market, and its Nymex unit, said Lehman ``continues to meet all of its obligations'' and is operating as normal. Options Clearing Corp., which guarantees all trades in the $1.6 trillion U.S. options market, also said Lehman remains in good standing.

Lehman Brothers has been suspended from energy and commodities trading in London.

The plunge in oil, cotton and copper led to the Reuters/Jefferies CRB Index of 19 commodities erasing its gains for the year. The CRB index fell for a second day, by 0.46 percent to 346.66.

Gold declined as some investors sold the precious metal to raise cash after U.S. stocks tumbled.

Gold for immediate delivery fell as much as 1.86 percent to $772.05 an ounce, trading for $789.90 at 1:20 p.m. in London. Silver for immediate delivery dropped 0.1 percent to $11.14 an ounce.

Pessimistic Sentiment

``The whole market is in risk reduction mode,'' said Paul Horsnell, head of commodities research at Barclays Capital Inc. in London. ``This has to wash its way through the whole system'' before prices return to being driven by fundamentals of supply and demand.

Brent crude oil for November settlement fell as much as $5.04, or 5.4 percent, to $89.20 a barrel on London's ICE Futures Europe exchange. It was at $89.95 a barrel at 1:20 p.m. London time.

Prices have dropped 14 straight days, the longest stretch since Brent futures were introduced in 1988.

Texas oil refiners may need weeks to restore normal operations as utilities struggle to restore power after Hurricane Ike swept through the region.

Exxon Mobil Corp., the world's biggest oil company, said its Beaumont, Texas, refinery took the ``most serious hit'' of its plants, from a wall of water pushed ashore by Ike. Marathon Oil Corp.'s Texas City, Texas, plant is without power and water.

A total of 14 Texas and Louisiana refineries, with combined crude-oil processing capacity of 3.57 million barrels a day, are shut because of Ike, the U.S. Energy Department said yesterday.

U.S. crude-oil and fuel inventories probably fell last week because of Ike, a Bloomberg News survey of analysts showed. The Energy Department is scheduled to release its weekly petroleum supply report on Sept. 17.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net.

Last Updated: September 16, 2008 08:54 EDT