Oil prices tumbled more than 2 percent Wednesday, as stock markets fell and government data showed a U.S. economy that remains weak.
The Federal Reserve's "Beige Book" showed only a slight increase in consumer spending last month while the economy expanded modestly in the Fed's 12 bank regions. And while home builders started new projects at the fastest rate in almost a year and a half, the pace remained far below what economists consider strong.
A weak economy means less demand for oil.
Benchmark crude fell $2.24, or 2.5 percent, to end the day at $86.29 per barrel in New York. Brent crude fell $2.76, or 2.5 percent, to finish at $108.39 in London. Prices dropped just before trading ended for the day, as stocks headed lower.
Indexes turned lower in the afternoon on reports of an impasse in talks to resolve Europe's debt crisis.
The Dow Jones industrial average fell 72 points, or 0.6 percent, to close at 11,505. The S&P 500 fell 16, or 1.3 percent, to 1,210. The Nasdaq slid 53, or 2 percent, to 2,604. Technology stocks closed lower after a rare earnings miss by Apple.
Oil supplies unexpectedly dropped by 4.7 million barrels last week, according to The Energy Information Administration. But it wasn't because the U.S. is using more crude. Rather, refineries imported less oil, gasoline and other fuels because demand fell.
Gasoline supplies fell by 3.3 million barrels. Refineries are slowing production to conduct regular maintenance work.
At the pump, gasoline prices rose 1.5 cents to a national average of $3.474 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline prices have increased almost every day for nearly two weeks, rising to record levels for this time of year.
In other energy trading, heating oil was down 4.65 cents to end at $2.9812 per gallon. Gasoline futures fell 7.54 cents to finish $2.6715 per gallon. Natural gas rose 3.3 cents to end at $3.586 per 1,000 cubic feet.