Oil fell below $89 a barrel Wednesday in Asia as regional stock markets slid on the Fed's gloomy outlook for the U.S. economy.

Benchmark crude for August delivery was down 29 cents at $88.93 a barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract added 79 cents to end Tuesday at $89.22 per barrel in New York.

Brent crude was down 29 cents at $103.71 on the ICE futures exchange in London.

Oil has gained the past few days but is significantly lower from its $106 level of about two months ago. Europe's debt crisis and waning growth in the U.S. and China have added to expectations of weak demand for crude, pulling down the oil price.

Oil prices got a lift Tuesday from a brighter outlook for U.S. homebuilders and rising industrial production but Federal Reserve chief Ben Bernanke's warning on the world's largest economy took its toll in Asia where stock markets were mostly lower.

Investors had hoped that Bernanke would discuss a new stimulus plan before the Senate Banking Committee. He didn't. Instead, Bernanke warned that the country could be headed for another recession, if Congress doesn't avert a looming budget crisis.

In other futures trading, heating oil was down 0.4 cent to $2.838 a gallon. Gasoline lost 0.1 cent to $2.734 a gallon and natural gas fell 0.5 cent to $2.791 per 1,000 cubic feet.