Oil drops $2 on signs of economic weakness

Oil dropped two dollars to below $90 a barrel yesterday as fresh signs of weakening US economic growth overshadowed Opec's decision to maintain its output cuts.

US crude lost $1.81 to $89.94 a barrel by 1700 GMT after dipping as low as $89.75. London Brent crude fell $1.67 to $90.54.

US President George W. Bush said yesterday that there were troubling, serious signs that the economy of the world's biggest oil consumer was weakening, but added that government measures could help stimulate growth.

The comments came after a report from the Labour Department showed employers in the United States cut 17,000 jobs in January - the first decline in four-and-a-half years - stoking fears of a recession.

Construction spending in the US, meanwhile, fell by a sharper-than-expected 1.1 per cent in December, reflecting the woes in the country's housing market.

Energy analysts are concerned that an economic slowdown or recession will cut into oil demand after years of robust consumption helped drive crude prices to record levels above $100 a barrel last month.