Oil has tumbled 23 percent from the record $147.27 a barrel reached on July 11. The dollar headed for a fifth weekly gain against the euro, its longest winning streak in more than two years, on speculation U.S. consumer spending will keep the world's biggest economy out of recession.
Crude oil for September delivery dropped as much as $2.26, or 2 percent, to $112.75 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $113.11 at 1:05 p.m. London time. Prices have declined 1.5 percent this week.
Gasoline demand was down 2.1 percent in the first seven months of the year as record prices and slower economic growth cut consumer spending, the American Petroleum Institute said Aug. 13. Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, a report showed.
European gross domestic product fell 0.2 percent in the second quarter from the first, when it increased 0.7 percent, the European Union statistics office in Luxembourg said yesterday.
The global economic outlook led the Organization of Petroleum Exporting Countries to leave its forecast for 2009 oil demand growth unchanged today at the lowest rate in seven years.
The 13-member group left the rate at 1.03 percent, the narrowest since 2002, even after raising its estimates of daily demand in 2008 and 2009 by 90,000 barrels, according to a monthly oil market report today.
The dollar climbed against the euro to $1.4698, the strongest level since Feb. 20, before trading at $1.4740 as of 1:05 p.m. in London, compared with $1.4826 yesterday. The U.S. currency has risen 2 percent this week.
Brent crude for October settlement fell as much as $1.24, or 1.1 percent, to $111.40 a barrel on London's ICE Futures Europe exchange, and traded at $112.19 at 1:05 p.m. local time.
Crude oil prices may rise next week as U.S. gasoline inventories fall because refineries are cutting output in response to low profit margins.