Oil down again after sharp fall on weak demand

Oil price drops to near $86 a barrel amid concern over global growth amid abundant supplies

Associated Press

NEW YORK (AP) -- More concerns about the strength of the global economy sent the price of oil down for the fourth straight day.

Oil fell as low as $86.06 a barrel on Tuesday before recovering to $88.33 a barrel, down 38 cents, in afternoon trading on the New York Mercantile Exchange. Oil dropped nearly 3 percent on Monday.

Crude has fallen by nearly 10 percent this month on concerns about the sluggish global economy, while supplies of oil remain ample.

The International Monetary Fund lowered its outlook for the world economy this year on Tuesday, predicting that government spending cuts will slow U.S. growth and keep the euro currency countries in recession. The IMF expects the U.S. economy to expand by 1.9 percent this year, down from a January estimate of 2.1 percent. Still, the IMF thinks the U.S. economy is improving and should grow by 3 percent next year.

Brent crude, which is used to price oil used by many U.S. refiners to make gasoline, was down $1.45 to $99.18 a barrel on the ICE Futures exchange in London. Brent hasn't traded below $100 a barrel since July.

In other futures trading on the Nymex:

— Wholesale gasoline rose 1 cent to $2.76 a gallon.

— Heating oil dropped 4 cents to $2.79 a gallon.

— Natural gas fell 2 cents to $4.12 per 1,000 cubic feet.

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Pamela Sampson in Bangkok, Pablo Gorondi in Budapest and Christopher Rugaber in Washington contributed to this report.

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