OIL prices dropped below US$114 (S$160.50) a barrel on Friday in Asia as investors speculated slowing economic growth in the world's largest economies will continue to undermining global crude demand.
Light, sweet crude for September delivery fell US$1.54 to US$113.47 a barrel in electronic trading on the New York Mercantile Exchange by mid afternoon in Singapore.
The contract fell 99 cents overnight to settle at US$115.01 a barrel.
'Worries about an economic slowdown in the US and Europe, and even Japan, are weighing on the oil market,' said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
Europe?s biggest economies - Germany, France and Italy - all contracted in the second quarter. Japan said this week its gross domestic product also shrank in the April-June period.
The US Energy Information Administration reported earlier this week a bigger-than-expected drop in gasoline supplies, but also said US demand for refined fuel products continues to fall.
A stronger dollar this week is also helping to push oil prices lower. The dollar rose to above 110 yen on Friday while the euro weakened to US$1.4723.
'With the dollar gaining strength against the euro and yen, oil and other commodities have come down,' Mr Shum said. 'Oil is not so much a hedge against a falling dollar anymore.'
Oil fell despite ongoing tensions in the nearly weeklong conflict between Russia and Georgia over two breakaway provinces.
Secretary of State Condoleezza Rice on Thursday urged Russia to honour a cease-fire with Georgia, a day after Moscow refused to leave the country despite having signed the EU-sponsored peace accord.
British oil company BP PLC said on Thursday it has resumed pumping gas into the Baku-Tbilisi-Erzurum pipeline that runs through Georgia, but two oil pipelines remained closed.
BP's Baku-Supsa oil pipeline was shut as a precaution, and the larger Baku-Tbilisi-Ceyhan line remains out of action after a fire earlier this month on the Turkish section of the line.
'This pipeline problem has simply been ignored by the market,' Mr Shum said. 'I think US$112 is still a key support level for oil.'
In other Nymex trading, heating oil futures fell 2.7 cents to US$3.0721 a gallon (3.8 litres) while gasoline prices dropped 3.65 cents to US$2.8755 a gallon.
Natural gas futures rose 4.3 cents to US$8.179 per 1,000 cubic feet. -- AP
