Crude oil for October delivery on the New York Mercantile Exchange (NYMEX) fell $1.11 to $27.70, just below the $27.77 level before the planes hit last week.

     "The market's gone really negative, expecting that demand's going to take a hit," said Tom Bentz of BNP Paribas futures in New York.

     On the second day of floor NYMEX trade since last Tuesday's attack on the nearby World Trade Center, business was delayed by 45 minutes due to a bomb threat and subsequent evacuation.

     Prices slumped as concern gathered that the fragile U.S. economy would sink into recession after Monday's record points loss on the U.S. stock market.

     Even a report from the American Petroleum Institute (API) showing a 4.2 million barrel, or two percent, drop in U.S. gasoline supplies failed to temper bearish sentiment.

     October crude in electronic ACCESS trade was up just four cents to $27.74 a barrel after the API report.

     Adding to market pressure, U.S. Energy Secretary Spencer Abraham last weekend asked OPEC producers to take the world's sliding economy into account when setting production levels at the group's upcoming September 26 meeting.

     OPEC Secretary-General Ali Rodriguez said the cartel would maintain its $22-$28 a barrel price target and would not change the current production at the meeting.

     OPEC oil ministers from Qatar and Saudi Arabia said they had not received any U.S. request for more production to cool prices. "The attacks didn't disrupt oil supply, but will hit demand," an OPEC adviser said.

     Refined products also took a battering with October gasoline finishing 4.17 cents down at 79.00 cents and heating oil ending 6.30 cents down at 74.40 cents a gallon.

     News that hundreds of thousands of tonnes of unwanted U.S. and Middle East Gulf jet fuel are heading to Europe because of a slump in airline demand weighed on prices. Both jet fuel and heating oil are classed as middle distillates.

     Lending some support are fears that U.S. reprisals for last week's attacks could ultimately disrupt oil supplies from the Middle East, where key regional producers include U.S. adversaries Iraq, Iran and Libya.

     On Tuesday, the Taliban information minister said that Afghanistan admitted that the U.S.'s prime suspect for the terror attacks, Osama bin Laden, may indeed be guilty, but

demanded proof before the country would hand him over.    

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