Oil Falls Below $40 on Weak Demand Fears

New York, NY, Dec. 22, 2008--Oil prices dipped below $40 a barrel Tuesday on concerns that energy demand is evaporating in the face of a severe global economic slowdown.

Prices have fallen 73 percent since July on investor fears that massive job layoffs and plummeting consumer spending in the U.S. are weakening global oil consumption.

By noon in Europe, light, sweet crude for February delivery dipped 6 cents to $39.85 a barrel in electronic trading on the New York Mercantile Exchange.

"Fears of demand are dragging the price lower," said Toby Hassall, an analyst at investment firm Commodity Warrants Australia in Sydney. "You don't want to get in the way of a runaway train."

Overnight, the February contract fell $2.45 to settle at $39.91 a barrel after Toyota Motor Corp. and drugstore operator Walgreen Co. reported dismal news.