NEW YORK— Oil prices broke beneath a key support level today, trading under $90 a barrel for the first time in eight months on expectations that a widening financial maelstrom will drastically reduce global demand for energy.

Light, sweet crude for November delivery fell $3.06 to $90.82 a barrel on the New York Mercantile Exchange, after earlier dipping to $88.89, the lowest level since Feb. 8. On Friday, the November contract lost 9 cents to close at $93.88 a barrel.

Oil prices have tumbled nearly 40 percent since peaking in July.

A significantly stronger dollar also weighed on prices.

The drop came as world stock markets plunged amid growing investor anxiety that the U.S. bad debt crisis is enveloping Europe. Germany announced Sunday a bailout package totaling 50 billion euros ($69 billion) for Hypo Real Estate, the country's second-biggest commercial property lender, part of a scramble by European governments to save failing banks. As anxiety deepened, the Dow Jones industrial average dropped more than 500 points.

"The market is finally acknowledging that this credit crisis is a global phenomenon and that will equate to lower world oil demand in the future," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago. "People thought the crisis would be contained to the U.S. and we'd see oil demand in China and India continue to grow. Now that just doesn't seem possible."

Investors shrugged off Friday's enactment of a $700 billion bailout package to buy bad mortgage debt, aimed at stabilizing the U.S. financial system.

Oil demand in the world's richest countries had already begun to slow since May, before the worst of the financial turmoil hit the United States last month, Shum said.

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 waiting to see if oil will take the key technical level of $85 a barrel, the price where crude was 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."

Investors will be watching if the Organization of Petroleum Exporting Countries moves to cut output should prices fall further.

Iranian Oil Minister Gholam Hossien Nozari said Saturday that it would be "unsuitable" for both producers and consumers for oil to dip below $100 a barrel. He called on fellow OPEC members not to pump too much oil and avoid a drop in prices.

Traders were also watching currency movements as investors tend to buy commodities like oil to defend against dollar weakness and a hedge against inflation, but sell crude as the U.S. currency strengthens.

"With Europe starting to be in panic mode, the dollar is gaining by default of the euro weakening and this continues to be a negative factor for commodities," said Olivier Jakob of Petromatrix in Switzerland.

The 15-nation euro fell to $1.3478 in Monday trading from $1.3774 late Friday.

In other Nymex trading, heating oil futures fell 11.41 cents to $2.5473 a gallon, while gasoline prices dropped 9.43 cents to $2.134 a gallon. Natural gas for November delivery fell 47.2 cents to $6.886 per 1,000 cubic feet.

In London, November Brent crude fell $4.44 to $85.81 a barrel on the ICE Futures exchange.