Economic weakness spurred the International Energy Agency to cut its forecasts for world oil demand growth for 2008 to its lowest rate since 1993.

U.S. light crude for November delivery was $4.19 down at $82.40 a barrel by 0915 GMT. It touched a session low of $82, its lowest since October 2007.

Prices have dropped more than 40 percent from a peak of $147.27 in July.

London Brent crude was down $4.11 a barrel at $78.55, below $80 for the first time in a year.

The IEA, which advises 28 industrialised nations, cut its world demand growth forecast for 2008 to 0.5 percent -- the lowest in percentage terms since 1993.

But the IEA's latest monthly Oil Market Report warned against too much focus on demand and said the credit crisis was also impacting supply, which at some stage could support oil prices.

MARKETS TUMBLE

The Organization of the Petroleum Exporting Countries has called an emergency meeting in Vienna on November 18 to discuss the impact of the global financial crisis on the oil market.

"OPEC appears to be scrambling to put in another, firmer floor at $80," said Jonathan Kornafel, Asia director of U.S. based options trader Hudson Capital Energy.

"The market may still overshoot on the downside regardless of what OPEC does, as financial flows continue to pour out of commodities," he added.

Commodities have tumbled along with global stock markets, which suffered heavy losses in Asia. The Nikkei index plunged nearly 10 percent on Friday. European shares were also down sharply.

Investors, who earlier this year piled into oil and other commodities as a hedge against inflation and the weak dollar, now want safety.

"Commodity indices suffered heavy losses over the past week as market sentiment continue to focus on the potential demand-side weakness associated with the ongoing instability in the financial sector," Barclays Capital said in a note.

But gold, a traditional safe haven, jumped more than 2 percent on Friday to a two-month high of $931 an ounce.

Investors will this weekend look to Washington, where finance ministers and central bankers from the Group of Seven nations will meet to look for ways to contain the crisis.