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Oil prices fall below $87 per barrel on Chinese economic warnings

Oil prices fell slightly in Asia Monday on downbeat economic comments from China's premier. Oil prices fell 41 cents to $86.69 per barrel.

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An oil pump works in the Sakhir, Bahrain, desert oil fields at sunset in this July 3 file photo. Oil prices in Asia fell slightly following the Chinese premier's gloomy comments on the Asian economy.

Hasan Jamail/AP/File

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Oil fell slightly in Asia on Monday as the Chinese premier's downbeat comments on the economy underlined the possibility of weak demand from the world's second biggest crude consumer.

Benchmark oil for August delivery was down 41 cents at $86.69 a barrel at midafternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose $1.02 to finish at $87.10 per barrel in New York on Friday. Brent crude was up 6 cents at $101.48 on the ICE futures exchange.

The weekend comments from Premier Web Jiabao came after China reported that economic growth fell to a three-year low of 7.6 percent in the second quarter. Wen said China's economy has not yet entered a recovery and "economic difficulties may continue for some time."

But the fall in oil was limited by signs that crude supplies are facing some constraints, which could act to push prices higher.

A series of reports last week showed that oil supplies from Iran, the North Sea and the U.S. have declined. Continued decreases would likely squeeze global supplies, while demand is expected to rise to a record of about 90 million barrels per day this year.

Oil has fallen from $106 about two months ago amid expectations Europe's debt crisis and weak economy would reduce demand for crude.

In other futures trading, heating oil was down 0.1 cent at $2.787 a gallon and natural gas was off 0.2 cent to $2.872 per 1,000 cubic feet. Gasoline fell 0.6 cents to $2.68 a gallon.

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