Oil dropped by $2 to $113 a barrel on Friday to trade near the lowest since early May, pressured by faltering global demand and rising supply.

Crude has fallen sharply since reaching an all-time high of $147.27 a barrel on July 11 partly on concern about weakening demand and fell as low as $112.31, the lowest since May 2, on Tuesday.

’The demand side is a major concern. Supplies from Opec countries are rising but there is a shortage of buyers. The industrial use in China has been cut back,’ said Gerard Burg from National Australia Bank.

US crude for September delivery fell $2.04 to $112.97 a barrel by 0818 GMT. The contract will expire on August 20. London Brent’s new nearby contract, October, lost $1.77 to $111.91 a barrel.

Supply has been rising as demand ebbs. Output from the Organization of the Petroleum Exporting Countries rose 145,000 barrels per day in July to 32.8 million bpd, the International Energy Agency said this week.

Oil also fell as the dollar strengthened following further proof that the US economic slowdown is spreading. The economy of 15-nation euro zone contracted 0.2 percent in the second quarter, data showed on Thursday.-Reuters