The latest readings on Chinese inflation and renewed worries about European debt are pushing oil lower.
Benchmark West Texas Intermediate crude fell $1.44 to $94.75 per barrel Monday morning on the New York Mercantile Exchange. Brent crude, which is used to price many international oil varieties, dropped $2.41 to $115.92 per barrel on the ICE Futures exchange in London.
Oil started falling early in electronic trading after a weekend announcement that inflation in China hit a three-year high in June. China has been raising interest rates in an attempt to control inflation and cool off its economy, but on Saturday the government said consumer prices continued to rise, jumping 6.4 percent last month.
Rising consumer prices will heap even more pressure on the country's burgeoning economy, and that could affect energy demand. Oil has been rising all year on the expectation that China would drive world oil demand.
Meanwhile, European officials disagreed over a second bailout package for Greece. Uncertainty about the country's debt problems raised concerns that the economic crisis could spread to Italy and Spain.
"You combine the debt crisis in Europe with those (Greece) austerity measures, and you get less spending and therefore less demand" for oil, analyst Andrew Lipow said.
The dollar shot up against other currencies in morning trading, and that also weighed on oil futures. Oil is traded in dollars and tends to fall as the dollar strengthens and makes crude barrels more expensive for investors holding foreign money.
In other Nymex trading for August contracts, heating oil fell 4 cents to $3.0588 per gallon and gasoline futures gave up 4 cents at $3.0506 per gallon. Natural gas added 7 cents at $4.272 per 1,000 cubic feet.