July 8 (Bloomberg) -- Crude oil declined to its lowest in more than a week as concern that the global economy may slow further prompted investors to sell commodities.

Oil has lost more than $5 since reaching a record $145.85 a barrel last week. Gold, soy and corn and aluminum declined today. Equities fell in Europe and Asia and U.S. index futures dropped on expectations that financial firms will need more capital to recover from credit market losses.

``There's a bit of risk aversion, you could say,'' said Andrey Kryuchenkov, an analyst at London-based Sucden (U.K.) Ltd. ``Oil is lower with equities because of negative sentiment on the economy as a whole, while the stronger dollar also removes support, and some of the geopolitical tensions ease.''

Crude oil for August delivery fell as much as $3.08, or 2.1 percent, to $138.29 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $138.67 at 1:50 p.m. London time.

Oil yesterday settled at $141.37 a barrel, down $3.92, and reached a record $145.85 on July 3.

The U.S. is ``very close to a disaster'' because it imports nearly 70 percent of its oil, investor T. Boone Pickens said during the interview with CNBC, unveiling a strategy to limit the country's dependence on foreign crude.

Oil also fell today as negotiations continued between Iran and western governments over the country's nuclear program.

``News that maybe the Iranians are willing to talk prompted'' the price decline, said Ann Kohler, an analyst at Caris & Co. in New York. The country is ``sending some mixed signals'' and the issue `` will continue to pressure oil prices as we go through into the summer.''

Hormuz Strait

OPEC's second- largest producer has said it may blockade the Straits of Hormuz, the shipping lane for a fifth of the world's crude, if its nuclear facilities are attacked. President Mahmoud Ahmadinejad said today he supports the resumption of dialogue to avert confrontation.

Brent crude oil for August settlement was $139.08 a barrel, $2.79 lower, on London's ICE Futures Europe exchange at 1:51 p.m. London time.

The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, declined 1.5 percent to 1,638.43 today. Gold dropped for a fourth day, while corn and soybeans extended losses.

The MSCI World Index, a measure of global equity prices, lost 0.7 percent to 1,355.74 at 1:15 p.m. in London, extending its decline from an October record to 19 percent. Futures on the Standard & Poor's 500 Index fell 0.3 percent, indicating the benchmark for American equities may slip into a bear market today.

Dollar Hedge

The U.S. dollar stabilized at $1.5688 against the euro, limiting the appeal of commodities as a hedge against inflation.

Hurricane Bertha, a ``powerful'' Category 3 storm with 120 mile-an-hour (195 kilometers-an-hour) winds, may weaken this week as it passes over the Atlantic away from land, the U.S. National Hurricane Center said. Bertha was about 1,305 miles southeast of Bermuda and forecast to swing north in the direction of the island.

To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net

Last Updated: July 8, 2008 08:53 EDT