Oil drops on signs of slower global growth

The price of oil plunged Wednesday on more evidence of slower growth in China.

Benchmark oil fell $2.93, or 3.2 percent, Wednesday to $88.96 per barrel in afternoon trading in New York. Brent crude, which is used to price international varieties of oil, fell $2.59, or 2.3 percent, to $108.98.

China's services sector slowed in September. Analysts say the index was 53.7 compared with 56.3 in August. It was released just days after a survey indicated that the country's manufacturing continues to slow.

China is the world's second largest economy and a huge importer of commodities like oil. Slower growth in that country could cut demand for oil.

The disappointing news is overshadowing signs of improvement in U.S. service companies, which employ nearly 90 percent of the work force. The Institute for Supply Management says its index rose in September at the fastest pace since March.

Meanwhile, the government says crude inventories fell slightly last week but remain 8.4 percent above year-ago levels. Gasoline supplies rose.

At the pump, AAA says the national average price for gasoline is essentially flat at $3.78 per gallon. That's about a nickel less than a month ago but nearly 37 cents more than a year ago.

In other energy futures trading:

• Natural gas is down 16 cents, or 4.6 percent, to $3.37 per 1,000 cubic feet, a day after hitting a high for the year.

• Heating oil has fallen 5 cents to $3.07 per gallon.

• Wholesale gasoline has dropped 7 cents, or 2.5 percent, to $2.80 per gallon.