“As the financial and economic crisis spreads, oil prices continue to trade on the bad economic news,” wrote James Williams, of WTRG Economics. “Buying oil futures is like trying to catch a falling knife.”

Williams added that, “It is now clear that that Asia and China in particular is not insulated from the problems of the West … That means lower demand for construction materials and the energy that is used in their manufacture and transportation.”

Rachel Ziemba, analyst at RGE Monitor said the bailout might “not be enough to unlock the credit markets, which is what is needed for a real improvement in economic outlook, and thus oil demand.”

Ziemba added that oil prices rose too far and too fast earlier this year, outpacing its fundamentals, and its “fall came as part of a broader reassessment of the global, not just U.S., outlook and recognition that global demand growth for oil would be lower than expected.”

Source: Crude hits the skids – Plummets below $90/barrel