Last updated: Mon. Jul. 16, 2012 - 08:06 am EDT
The price of oil slipped below $87 a barrel on Monday as the Chinese premier gave a downbeat assessment of the economy, underlining the possibility that demand may drop in the world's second-biggest crude consumer.
By early afternoon in Europe, benchmark oil for August delivery was down 35 cents at $86.75 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.02 to finish at $87.10 per barrel in New York on Friday.
In London, Brent crude was up 32 cents at $102.72 on the ICE futures exchange.
The weekend comments from Premier Web Jiabao came after China reported that economic growth fell to a three-year low of 7.6 percent in the second quarter. Wen said China's economy has not yet entered a recovery and "economic difficulties may continue for some time."
The fall in the price of oil was limited by signs that crude supplies are facing some constraints, which could act to push prices higher.
A series of reports last week showed that oil supplies from Iran, the North Sea and the U.S. have declined. Continued decreases would likely squeeze global supplies, while demand is expected to rise to a record of about 90 million barrels per day this year.
Sanctions by the U.S. and the EU against Iran affecting the Islamic Republic's oil exports have been supporting prices, as has the possibility that Iran could try to block oil shipments through a key Middle East waterway.
"Iran has stated that it will be scaling up its military presence in the Strait of Hormuz, through which 20 percent of seaborne crude oil is transported," said analysts at Commerzbank in Frankfurt. "Despite an oil pipeline having been put into operation in the United Arab Emirates, a blockade would still cut large parts of the oil production in the Gulf states off from the world market, which justifies a risk premium on the oil price."
Oil has fallen from $106 about two months ago amid expectations Europe's debt crisis and weak economy would reduce demand for crude.
In other futures trading, heating oil was down 0.11 cent at $2.7871 a gallon and natural gas was off 0.2 cent to $2.872 per 1,000 cubic feet. Gasoline added 0.74 cents to $2.8235 a gallon.