Benchmark oil for August delivery was down USD 1.12 at USD 86.10 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude fell 44 cents to settle at USD 87.22 yesterday in New York.
In London, Brent crude for August delivery was down USD 1.20 at USD 99.50 per barrel on the ICE Futures exchange.
Central bankers in Europe and China cut lending rates yesterday while the Bank of England pledged to boost money in circulation in a bid to spur weakening economic growth. Some analysts said the moves weren't sufficiently drastic to spark growth while others expect more stimulus measures soon as the global economy deteriorates.
Crude has plummeted from USD 106 two months ago as Europe's economic and political turmoil dampens global growth expectations.
"We still believe that disappointing economic data going forward, while suggesting curtailed oil demand, will also increase the likelihood of some form of stimulus capable of reviving oil's appeal," energy trader and consultant Ritterbusch and Associates said in a report.
Investors also brushed off a larger than expected drop in US crude supplies, which suggested demand may be improving.
The Energy Department's Energy Information Administration yesterday said that crude inventories fell 4.3 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a decrease of 2 million barrels.
The US June employment report due later today is likely to provide another cue for the oil market. Analysts are forecasting the economy added about 90,000 jobs last month and the unemployment rate was steady at 8.