Oil tumbles on fears of economic slump

By CHRIS KAHN | September 6, 2011 | 10:35 AM EDT

NEW YORK (AP) — Oil is down nearly 2 percent on fears that the U.S. and Europe are headed for a prolonged economic slump.

Benchmark West Texas Intermediate crude lost $1.40 to $85.05 per barrel in New York.

The drop in oil follows a decline in world markets over the Labor Day weekend. Investors remain tentative after the U.S. reported last week that it failed to add jobs in August. Europe's debt crisis also raised doubts about further economic recovery.

Independent analyst Jim Ritterbusch said the sluggish U.S. and European economies will help keep oil demand well below expectations.

Meanwhile, retail gasoline was flat overnight at a national average of $3.66 per gallon.