The New York Times reports that oil prices dropped to $89.15 recently. Apparently energy investors view the economy as an indicator of oil demand. So, as the economy slows, oil future prices will decline due to the expected decline in consumption. The article lists gasoline and heating oil as examples of petroleum products for which demand will lower.
This is confusing to me. Although I understand that increased costs means decreased demand, I would think (for petroleum) that demand would fall for plastic products or other nonessential petroleum products. Is the market for products such as gasoline and heating oil really that volatile? At this time of the year when the weather is coldest and after the holiday travel rush, I would think the demand for these products would be relatively steady.
Another interesting note in this article is the close link between oil prices and the economy. Though many events combined to bring on this "fear of a recession" (we won't know if it really was a recession until after the fact), but this article reports that high oil prices were partly to blame as well. This close relationship between the energy market and the economy as a whole, though, may end up benefiting the economy. As the New York Times notes:
"If oil prices continue to fall, as many analysts now expect, that could relieve some pressure on the economy"