What it’ll take to sink oil prices

Subprime woes, slowing economic growth, even a recession – will anything bring prices back down to $30 a barrel?

NEW YORK (CNNMoney.com) — Could oil prices soon sink?

A strong economy equals strong demand, which equals higher prices.

So when stock markets tumbled earlier this week on fears that woes in the subprime housing lending sector could spread to the wider economy, oil prices followed stocks lower. Crude has lost some 6 percent over the last week, and at the $58 level is at the low end of its multi-week range.

And it hasn’t been just subprime trouble sparking fears of an economic slowdown. Chinese markets – along with the rest of the world – dove earlier this month. Economic numbers of late have been shaky. Even Alan Greenspan has muttered the “R” word.

So are oil prices headed for a collapse?

“It is now looking like the day of reckoning may be sooner than we thought,” Peter Beutel, an oil analyst at Cameron Hanover, wrote in a research note Wednesday. “If this is true, and equity prices continue falling, and then we have a recession, the impact on oil would be very bearish.”

CNN/Money