LONDON (AFP) - - Oil prices extended their slide Tuesday, closing below 120 dollars for the first time in three months, as signs of a slowing global economy raise doubts about demand.
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US crude prices have tumbled almost 20 percent since reaching a record-high 147.27 dollars a barrel on July 11.
In London, Brent North Sea crude for September delivery dropped 2.98 dollars to settle at 117.70 dollars.
"Oil prices today are getting hammered on more signs that point to demand destruction," said Phil Flynn, an analyst at Alaron Trading.
Flynn noted a British government report Tuesday showing manufacturing output fell more than expected.
"It appears that the weak economic numbers coming out of the UK will put pressure on the eurozone to worry more about growth and less about inflation and perhaps cut interest rates," he said.
The Federal Reserve, as widely expected, held its short-term interest rate unchanged at 2.0 percent, citing lackluster growth in the world's largest economy and inflation worries.
On Monday, Brent fell below 119 dollars for the first time since early May after a weak US Commerce Department report showed consumer spending, which accounts for two-thirds of economic output, had cooled in June while inflation heated up.
The United States is the world's biggest energy user and slowing consumer spending tends to weigh on global oil demand projections.
"Rising supplies from OPEC are making participants painfully aware that deteriorating economic activity is making less and less of a call on stockpiles," said Mike Fitzpatrick at MF Global.
Prices also lost support from the diminishing threat of a storm in the Gulf of Mexico, home to major oil installations. Tropical Storm Edouard made landfall Tuesday on the Texas coast in the Gulf of Mexico, according to the National Hurricane Center. The market had feared Edouard would turn into a hurricane that could disrupt oil output in the region.
Meanwhile, Iran on Tuesday faced a fresh ultimatum from six global powers to accept an incentives package to freeze sensitive nuclear work or face more UN sanctions.
Tensions over Iran's nuclear program had surged on Monday after the Islamic republic missed a deadline over the weekend to respond to an international package of incentives aimed at persuading it to freeze uranium enrichment.
Iran, the world's fourth biggest producer of crude oil, has refused to suspend uranium enrichment it says is aimed solely at producing fuel for nuclear power production.
The United States and its allies fear the program masks a nuclear weapons program.
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