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The July contract for light, sweet crude oil futures fell 3.2% to $87.82 a barrel on the New York Mercantile Exchange.
Crude oil futures closed at a seven-month low today as the dollar strengthened against the euro and concerns about Spain and the health of the Chinese economy squeezed demand.
According to MarketWatch, the July contract for light, sweet crude oil futures fell $2.94, or 3.2 percent, to settle at $87.82 a barrel on the New York Mercantile Exchange, after touching an intra-day low of $87.49.
Crude oil is heading for the biggest monthly decline since December 2008, the Associated Press reported.
The greenback hit a 22-month high against the euro amid a global flight to safe haven investments, making dollar-priced crude oil more expensive for buyers using weaker currencies such as the euro, according to Agence France-Presse.
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The escalating financial crisis in Spain has focused attention on the weakness in the European economy and fuelled fears the region could slip into recession.
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"Fears of contagion in Europe has sent the euro plundering further closer to a two-year low, which is acting as a jackhammer on crude prices," Matt Smith, a commodity analyst at Summit Energy Services, was quoted by CNN Money as saying.
Chinese media reports that Beijing would not a launch a huge stimulus package like the one in 2008 also weighed on crude oil prices, amid concerns about weakening growth in the world’s second-largest oil guzzler, MarketWatch said.