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Originally published Sunday, July 22, 2012 at 10:14 PM

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Oil falls below $89 amid Europe, China jitters

Oil sank below $89 a barrel Monday in Asia as an escalation in Spain's debt crisis and a warning on China's growth prospects suggested demand for crude will weaken.

The Associated Press

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BANGKOK —

Oil sank below $89 a barrel Monday in Asia as an escalation in Spain's debt crisis and a warning on China's growth prospects suggested demand for crude will weaken.

The benchmark crude futures contract for September delivery was down $3.01 at $88.81 a barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The August contract, which expired Friday, ended down $1.22 at $91.44 per barrel in New York.

Brent crude was down $3.37 at $103.46 a barrel on the ICE futures exchange in London.

The already dim global economic outlook was further clouded by weekend reports that an adviser to China's central bank predicted the world's second largest economy could slow further in the third quarter. Economic growth in the world's No. 2 crude consumer slowed to a three-year low of 7.6 percent in the second quarter as foreign demand for Chinese exports weakened and measures to control inflation crimped activity.

The financial pressure on Spain ratcheted up further Monday, with the interest rate on the country's key 10-year bond at levels that saw other European nations needing a financial bailout.

Europe's lengthy battle with a massive government debt crisis has taken a toll on industries in other countries such as the U.S. and China. It also has cut demand for oil and other energy products.

On Friday, Spain's government predicted its recession will extend into next year and the region of Valencia said it needed help from the central government to pay its bills. Germany was also a concern as finance officials there said growth in Europe's strongest economy likely slowed somewhat in the second quarter.

In other energy trading, gasoline was down 8.1 cents at $2.763 a gallon and heating oil fell 7.8 cents to $2.846 a gallon. Natural gas was steady at $3.081 per 1,000 cubic feet.

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