Oil declined for a second day in New York, extending its biggest drop in two months, on concern that a U.S. economic slowdown may curb demand in the world’s largest consumer of crude.

Futures fell as much as 1.3 percent, deepening yesterday’s 2.4 percent loss. Crude tumbled almost $4 in three minutes yesterday before the expiry of October options contracts. The Federal Reserve Bank of New York’s general economic index, known as the Empire State Index, fell to a three-year low. Saudi Arabia is taking action to reduce oil prices, a Persian Gulf official with knowledge of the matter said today.

Oil for October delivery fell as much as $1.23 to $95.39 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude for November settlement fell 30 cents to $113.49 on the London-based ICE Futures Europe exchange. It dropped 2.5 percent yesterday.

Gold cheaper together with shares, oil and the euro due to profit taking following the price increase to a maximum of 6.5 months last week.

Last week, the price rose by 2 percent a day after the U.S. Federal Reserve announced the start of the third stage of "quantitative easing" - buying mortgage-bonds to $ 40 billion a month.

In Europe, investors focused on concerns regarding the banking system in Spain and Greece's ability to make budget cuts necessary to obtain further financial support.

October futures price of gold on the COMEX is now 1766.4 dollars per ounce.

Change % Change Last

Oil $98.10 -0.21 -0.21%