Oil prices continued their downward slide to below $88 a barrel as poor US economic data reinforced fears that the world's largest economy is on the brink of a recession, knocking stock markets lower.
US light crude for March delivery fell 87 cents to $87.54 a barrel in early trading, after tumbling nearly 2 per cent the previous session.
London Brent crude fell 75 cents to $88.07.
Financial markets continued their fall for a second day after the Institute of Supply Management reported yesterday that activity in the US services sector slumped to a level not seen since the 2001 recession.
Fears the US will slide into a full-blown recession in the wake of a housing slump and the resulting credit crunch have dampened the outlook for global energy demand growth, pulling oil back from a record-high above $100 a barrel hit in early January.
