Last updated: Thu. Jul. 12, 2012 - 06:56 am EDT
SINGAPORE (AP) — Oil fell to near $85 a barrel Thursday as signs of slowing global economic growth offset hopes that central banks will soon implement stimulus measures.
Benchmark oil for August delivery was down 71 cents at $85.10 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose $1.90 to settle at $85.81 on Wednesday in New York.
In London, Brent crude for August delivery was down 75 cents at $99.48 per barrel on the ICE Futures exchange.
Crude has plummeted from $106 in May amid expectations that a global slowdown led by Europe, the U.S. and China will undermine oil demand.
Some analysts expect crude prices to recover in the second half of the year as policymakers use fiscal and monetary stimulus to boost economic growth and fuel consumer demand. In minutes of its last meeting that were released Wednesday, the U.S. Federal Reserve did not suggest it plans to ease monetary policy soon.
Other analysts say investor pessimism about Europe's debt crisis is well-founded and commodity prices will likely languish during the next six months.
"We continue to expect the problems in Europe to escalate," said Julian Jessop, chief global economist with Capital Economics. "While extra global policy support should mean that commodity demand is higher than it would otherwise have been, it should still be sluggish, maintaining the downward pressure on prices."
Jessop said he expects Brent crude to trade between $70 and $100 in the second half.
A sharp drop in U.S. crude supplies, suggesting demand may be improving, has helped support oil prices. The Energy Department's Energy Information Administration said Wednesday that crude inventories fell 4.7 million barrels last week, three times the drop expected by analysts.
In other energy trading, heating oil was down 2.8 cents at $2.73 per gallon and gasoline futures fell 1.7 cent to $2.75 per gallon. Natural gas slid 1.3 cents to $2.84 per 1,000 cubic feet.