10/23/2012 09:09 EDT | Updated 12/23/2012 05:12 EST

Crude oil price drops below US$87 a barrel on gloomy corporate forecasts

NEW YORK, N.Y. - The price of oil fell to a three-month low Tuesday as big corporations cut earnings forecasts, raising concerns about economic growth and oil demand.

Benchmark West Texas Intermediate crude dropped $1.98, or 2.3 per cent, to finish at US$86.67 a barrel in New York. Oil has lost about six per cent since Thursday, the biggest three-day drop in a month.

Oil has plunged as jitters on Wall Street have migrated to the energy markets. 3M Co., with products ranging from Scotch tape to traffic sign coatings, and Posco, the big Korean steel maker, were among the major companies on Tuesday that cut forecasts because of weak economic growth in China and Europe.

Caterpillar Inc., the big machinery company, did the same on Monday. That gloominess has sent most global stock markets sharply lower.

"The poor earnings reports seem to have rekindled worries that the global economy is under pressure and slowing," said Tradition Energy oil analyst Gene McGillian.

Brent crude fell $1.19, or 1.1 per cent, to end at US$108.25 a barrel in London. Brent has dropped more than five per cent in the past six trading sessions.

In other energy futures trading in New York, heating oil fell 3.33 cents to finish at US$3.043 a U.S. gallon (3.79 litres).

Natural gas broke the trend, rising 8.3 cents to end at $3.535 per 1,000 cubic feet after falling sharply Monday.