Oil drops to almost $98 on China economic slowdown

The price of oil dropped below $98 a barrel Wednesday as the possibility of a deeper economic slowdown in China fed expectations of weaker demand and a report showed a rise in U.S. oil supplies.

By early afternoon in New York, benchmark U.S. crude for April delivery was down $2.29, or 2.3 percent, to $97.74 a barrel. On Tuesday, the oil dropped $1.09 to close at $100.03.

Brent crude, used to set prices for international varieties of crude, was down 80 cents to $107.79 on the ICE Futures exchange in London.

China's drop in exports in February fueled worries of a further slowdown in the world's second-largest economy, which would tamp down demand for energy. China's economic growth of 7.7 percent last year was the lowest in two decades.

Meanwhile, the U.S. Energy Department said U.S. crude oil supplies grew by 6.2 million barrels last week, well above the increase of 2.3 million barrels expected by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

Oil prices have been dropping since last week, when they spiked on fears that Russia's military incursion into the Crimean Peninsula might lead to U.S. and European sanctions on one of the world's largest energy suppliers.

Providing some support to prices, the Organization of Petroleum Exporting Countries, which accounts for around a third of the world's oil production, raised slightly its forecast for global crude demand in 2014.

In its monthly oil market report released Wednesday, OPEC estimated the world will consume 91.1 million barrels a day this year, 1.14 million barrels more than in 2013 and 50,000 barrels above the group's previous forecast released in February.

In other energy futures trading on Nymex:

— Wholesale gasoline was down 2 cents at $2.95 a gallon.

— Heating oil declined 4 cents to $2.92 a gallon.

— Natural gas lost 9 cents to $4.51 per 1,000 cubic feet.