Oil prices fall as financial turmoil goes global

If crude prices continue their slide, gasoline could fall back below $3 a gallon as early as next month, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J. But consumers may not feel much relief given the whirlwind battering the economy.

"I don't think you can get excited when the reason for lower prices is recession," Kloza said. "After people look at their 401(k) statements, $3 gas isn't going to look that great."

In other signs the meltdown is spreading, Belgian Prime Minister Yves Leterme said Sunday that France's BNP Paribas SA had committed to taking a 75 percent stake in Fortis NV.

British treasury chief Alistair Darling said he was ready to take "pretty big steps that we wouldn't take in ordinary times" to help the country weather the credit crunch.

Oil market traders are now watching to see if oil prices will sink to the next key technical level of $85 a barrel, the price for a barrel of crude when it began its historic run-up late last year.

"If we take out that area, we could see a major washout of this market," Flynn said. "We could be talking $50 or $60 oil."

If that happens, analysts say the Organization of Petroleum Exporting Countries may to cut production and keep prices from falling further.

Iranian Oil Minister Gholam Hossien Nozari on Saturday called on fellow OPEC members not to pump too much oil.

But the repercussions of a production cut could be severe. Reducing output could send oil prices higher, increasing financial strain just as the global economy is contracting.

"If we have a global slowdown and OPEC cuts production, it would make things worse," Flynn said. "OPEC's best chance to have sustained income is help find a way out of this crisis."