Sept. 16 (Bloomberg) -- Crude oil tumbled as much as $2 a barrel to a seven-month low and gasoline fell after Lehman Brothers Holdings Inc. filed for bankruptcy and refineries along the Gulf of Mexico escaped major damage from Hurricane Ike.

Petroleum futures dropped on signs turmoil on Wall Street and the worsening credit crisis may weaken the global economy and cut demand for raw materials. Refiners said preparations are under way to restart plants in the Houston area.

``There are grave concerns about financial stocks and what their weakness will mean for the real economy and energy demand,'' said Adam Sieminski, Deutsche Bank's chief energy economist, in Washington. ``It also appears that most refineries along the Gulf are OK.'' Some ``are already gearing up to restart, which has to be good news.''

Crude oil for October delivery fell $2, or 2.1 percent, to $93.71 a barrel at 8:06 a.m. Sydney time on the New York Mercantile Exchange, the lowest intraday price since Feb. 14. Oil on the exchange is down $2.27 this year. Prices have fallen 36 percent from a record $147.27 a barrel on July 11.

Yesterday, oil plunged $5.47, or 5.4 percent, to settle at $95.71 a barrel, the lowest settlement price since Feb. 15.

Gasoline for October delivery fell 1.64 cents, or 0.6 percent, to $2.5450 a gallon in New York after tumbling 20.82 cents, or 7.5 percent, to $2.5614 a gallon yesterday, the lowest close since March 19.

``Prices went beyond what the fundamentals justified on the upside and the same may occur as we move lower,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York.

Merrill Lynch

Bank of America Corp., the biggest U.S. consumer bank, agreed to acquire Merrill Lynch & Co. for about $50 billion as the credit crisis claimed another of America's oldest financial companies. American International Group Inc., the largest U.S. insurer by assets, may need to raise $20 billion in capital and sell $20 billion of assets to ease a cash crunch.

``The collapse of a big Wall Street firm is an exclamation point that causes one to re-examine the direction the U.S. economy is going,'' said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts. ``Lehman's collapse and the Merrill sale underscore the possibility of a further economic slowdown.''

CME Group Inc., the world's largest futures market, and its Nymex unit, said Lehman ``continues to meet all of its obligations'' and is operating as normal. Options Clearing Corp., which guarantees all trades in the $1.6 trillion U.S. options market, also said Lehman remains in good standing.

Lehman Brothers was suspended from energy and commodities trading in London.

Brent Oil

Brent crude oil for October settlement declined $5.20, or 5.3 percent, to expire at $92.38 a barrel yesterday on London's ICE Futures Europe exchange. It was the lowest closing price since Feb. 8. Prices have dropped 13 straight days, the longest stretch since the contract was introduced in 1988.

The more actively traded November Brent contract dropped $6.77, or 6.8 percent, to $92.61 a barrel.

A total of 14 Texas and Louisiana refineries, with combined crude-oil processing capacity of 3.57 million barrels a day, are shut because of Ike, the U.S. Energy Department said yesterday.

U.S. energy producers have idled about 99.9 percent of oil production and 93.8 percent of natural-gas output in the Gulf because of Ike and Hurricane Gustav, which made landfall in Louisiana on Sept. 1, the Minerals Management Service said yesterday in a statement on its Web site.

Reserves Release

The International Energy Agency, an energy adviser to 27 industrialized countries, said it is analyzing the impact of Ike on oil, gas and refinery output and may release strategic reserves if called upon. The IEA coordinated the release of crude oil and fuel supplies after hurricanes Katrina and Rita struck the U.S. Gulf Coast in 2005.

The Energy Department said Sept. 14 it has released 939,000 barrels of oil from the Strategic Petroleum Reserve because of shortages at refineries caused by Ike and Gustav. Department spokeswoman Healy Baumgardner said via e-mail yesterday that one additional request is pending.

U.S. crude-oil and fuel inventories probably fell last week because of Ike, a Bloomberg News survey of analysts showed. The Energy Department is scheduled to release its weekly petroleum supply report on Sept. 17.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net; Margot Habiby in Dallas at mhabiby@bloomberg.net.

Last Updated: September 15, 2008 18:40 EDT