Crude oil drops to 7-month low as refineries escape Ike damage

Crude oil fell to a seven-month low and gasoline tumbled after Lehman Brothers Holdings Inc filed for bankruptcy and refineries along the Gulf of Mexico escaped major damage from Hurricane Ike.

Metals and crops also dropped, prompting a 5 percent slump in the S&P GSCI Index of 24 commodities, on speculation turmoil on Wall Street and the worsening credit crisis may weaken the global economy, cutting demand for raw materials. Refiners said preparations are under way to restart plants in the Houston area, home to more than 20 percent of US refining capacity.

"Commodity markets are saying that financial market turbulence is yet another negative signal for the US economy", said Mike Wittner, head of oil research at Societe Generale SA in London. "The level of risk aversion in oil and commodities trading is only going to go higher."