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LONDON (Thomson Financial) - Oil prices tumbled by over 2 usd on stock market and dollar weakness and ahead of a weekly report due tomorrow expected to show US crude stocks are growing.

More disappointing data from the US, the world's largest economy, exacerbated price-drops already seen in the earlier part of the session. Futures accelerated to the downside as data showed a surprise contraction in non-manufacturing activity which raised concerns over a slowdown in demand.

The strength prices had garnered yesterday, from Middle East and Nigerian geopolitical tensions and from a statement from the White House announcing it will buy more barrels for the US Strategic Petroleum Reserve, faded. Meanwhile thick fog which slowed crude-carrying ships into the Houston Channel cleared -- helping the supply picture today.

"The petroleum markets are coming under renewed selling ... as a rebound in the US dollar and weakness in the stock market present a consistent bearish picture, and traders are anticipating another week of typical seasonal data in Wednesday's (US inventory) data," said Citigroup analyst Tim Evans.

The US Department of Energy's statistical wing, the Energy Information Administration, will release the weekly figures at 3.30 pm London time tomorrow.

In the week to Feb 1, crude oil stocks will have risen 2.07 mln barrels, gasoline will be up 1.7 mln barrels while distillate inventory, which includes heating oil, will have dropped by 1.9 mln barrels, according to analysts polled by Thomson Financial News.

In recent weeks oil has tracked volatile equity markets. Worries of a global slowdown in growth has seen oil lose some 10 pct since hitting a record 100.09 usd at the start of this year.

"The sharp deterioration in the recent US macro statistics will remain the predominant influence on energy prices over the short-term," said MF Global analyst Ed Meir. "Given how weak the recent stats have been looking thus far, and the potential drag they could have on energy demand, sizable price rallies in crude still look very suspect to us and should be sold into."

Iraqi Oil Minister Dr Hussain al-Shahristani, on the other hand, today said OPEC is well aware of a US slowdown, but reckons demand for crude oil will not be hurt in the meantime as Asia's appetite is not likely to abate.

"The indication to us is that there will be a slowdown in the United States. We're not sure if there is going to be a recession," he told Thomson Financial News on the sidelines of a London conference. "We don't think a slowdown in the US will have a significant effect on the demand for oil, particularly because of growth in east and south Asia."

At 4.05 pm, New York's WTI crude for March delivery was down 2.17 usd at 87.85 usd per barrel.

In London, Brent crude for March delivery was down 2.05 usd at 88.41 usd per barrel.

Looking ahead, all eyes will be fixed on equity market volatility which is likely to spill into commodities as traders try to cover losses and hedge against weakness. On the fundamental side, the OPEC cartel will hold a meeting on March 5 to decide on supply levels.

At its gathering last Friday ministers left output unchanged. Officials are sending mixed signals to the market about the next meeting and there seems to be no consensus yet over the decision.

Kuwait has said an increase is on the cards while Venezuela and Iran are likely to support a cut. Others, meanwhile, including Saudi Arabia, the defacto head of OPEC, have said it is too early to reach a decision on output and that stock levels must be monitored in the weeks ahead of the meeting.