Oil prices fell below $40 a barrel yesterday, adding to a sharp drop overnight, on concerns that energy demand is evaporating in the face of a severe global economic slowdown.

Prices have fallen 73 percent since July on investor fears that massive job layoffs and plummeting consumer spending in the US are weakening global oil consumption.

By noon in Europe, light, sweet crude for February delivery dipped 6 cents to $39.85 a barrel in electronic trading on the New York Mercantile Exchange.