BANGKOK – The price of oil fell below $88 a barrel Tuesday as shaky economic recoveries in China and the U.S. raise the prospect of weaker demand.
Benchmark oil for May delivery was down $1.05 to $87.66 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract dropped $2.58, or 2.8 percent, to finish at $88.71 a barrel on Monday after hitting $87.86 earlier in the session. Crude has dropped nearly 10 percent this month.
The Chinese government on Monday said growth in the world's second-largest economy slowed to 7.7 percent in the first quarter from 7.9 percent in the final quarter of last year. Growth was expected to accelerate slightly to 8 percent. Analysts have warned that China's recovery from its deepest slump since the 2008 global crisis is weak.
That slowdown, combined with weak employment and manufacturing reports from the U.S., suggests that demand won't be strong enough to absorb the ample supplies on the world market.
"This isn't a fall just because the global economy is shifting down, this is about a world that has enough oil," said Carl Larry of Oil Outlooks and Opinions in a market commentary.
Brent crude, which is used to price oil used by many U.S. refiners to make gasoline, fell $1.01 to $99.62 a barrel on the ICE Futures exchange in London.
In other futures trading on the Nymex:
— Wholesale gasoline fell 2.4 cents to $2.736 a gallon.
— Heating oil dropped 2.8 cents to $2.802 a gallon.
— Natural gas rose 0.7 cent to $4.144 per 1,000 cubic feet.