LONDON—Crude-oil futures fell as the euro slumped against the dollar and European stock markets fell on euro-zone debt contagion worries and concerns about the U.S. economy.
Oil prices typically fall as the dollar strengthens as it makes the commodity more expensive for holders of other currencies.
Ahead of the New York day, the October contract on the New York Mercantile Exchange was down 98 cents, or 1.1% at $88.07 per barrel. October Brent on London's ICE futures exchange was down 22 cents, or 0.2%, at $114.33 a barrel.
U.S. President Barack Obama's $447 billion proposal in tax cuts and new spending to revive the U.S. economy wasn't enough to restore confidence to markets, even though the stimulus package was larger than analysts had expected.
"Is it going to be enough to really create jobs? It's difficult right now to be fully convinced of that," said Olivier Jakob, managing director of oil consultancy Petromatrix.
Fears over economic growth in the U.S., the world's largest oil consumer, removed some of the support oil prices were receiving from a tropical storm in the Gulf of Mexico that potentially threatens some crude output.
Energy producers are monitoring tropical storm Nate, which could strengthen into a hurricane Friday or Saturday, according to the National Hurricane Center.
BP evacuated non-essential personnel from three production platforms in the U.S. Gulf Thursday. Over a quarter of U.S. oil output is produced in the Gulf of Mexico.
Andy Sommer, a senior oil analyst at EGL, said tightness in the oil market is supporting prices in the long term despite fears over the economic situation in the U.S. and Europe.
"For now, we see a relatively controlled slowdown on the [oil] demand and as long as supply continues to disappoint to a similar extent, prices will stay where they are for now," he said.
