LONDON, Jan 21: Oil slid by $2 to a six-week low below $89 a barrel on Monday as stock markets fell and concern mounted over an economic slow-down led by top consumer, the United States.

Stock markets across the world took a battering as anxiety spread that a fiscal stimulus plan proposed by US President last week would not be enough to prevent a recession.

US crude fell by $1.98 to $88.59 in electronic trade, just off a session low of $88.56, which was the lowest level since Dec 11.

Oil has dropped by more than 10 per cent from a record high of $100.09 hit on Jan 3.

Floor trading on the NYMEX is shut on Monday for the Martin Luther King Jr. holiday.

London Brent crude was down $1.73 at $87.50.

“The economic slowdown is dominating sentiment Monday,” Tony Machacek at Bache Commodities said.

Milder-than-normal weather and costly fuel are denting demand for refined products such as heating oil and gasoline, analysts said.

Slower consumption has led some refiners in the US, Europe and Northeast Asia to cut back production.

“With US gasoline stocks standing at fairly comfortable levels, demand growth in the US is likely to soften,” Barclays Capital said in a research note.

Other commodities, such as precious metals, also dropped as fears deepened that a possible recession in the United States would have knock-on effects for other economies.

“The demand concern, i.e. US recession, will keep the market volatile in the near term,” said Badung Tariono, a fund manager at ABN AMRO Energy Fund in Amsterdam.

Speculators, such as hedge funds, on NYMEX are becoming nervous, according to the latest data from US regulator, the Commodity Futures Trading Commission, released on Friday.—Reuters