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Wednesday, August 1, 2012 - Page updated at 01:00 a.m.

Oil falls to near $89 as ECB moves awaited

The Associated Press

Oil fell to near $89 a barrel Tuesday in Asia as investors wait to see if European finance chiefs deliver on bold talk of saving the euro.

Benchmark crude was down 32 cents at $89.46 a barrel at midafternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell 35 cents to $89.78 on Monday in New York. Brent crude was down 60 cents at $105.60 on the ICE futures exchange in London.

Oil has climbed after last week's vow from European Central Bank chief Mario Draghi to do whatever it takes to keep the euro common currency intact.

Similar remarks from the leaders of France and Germany have created a chorus of support for the beleaguered euro, which was facing a new challenge to its existence as a surge in Spain's borrowing costs raised the prospect that one of Europe's biggest economies could ask for a bailout.

The ECB meets Thursday and expectations are high that Draghi will announce that the central bank plans to resume purchases of government bonds to lower borrowing costs of financially troubled European countries as well as take other steps.

Such announcements could push the price of higher oil. It has fallen from about $106 a barrel nearly three months ago as Europe's debt crisis dragged on the global economy and China's growth slowed, reducing demand for crude.

In other energy futures trading, gasoline was down 1.5 cents at $2.804 a gallon and heating oil fell 1.5 cents to $2.867 a gallon. Natural gas rose 1.7 cents to $3.231 per 1,000 cubic feet.

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