Oil prices plunged Wednesday on more evidence of slower growth in Asia and concerns about Europe's ongoing financial crisis.

Benchmark oil fell $3.43 or 3.7 per cent to $88.46 per barrel in afternoon trading on the New York Mercantile Exchange. Brent crude, which is used to price international varieties of oil, fell $2.59, or 2.3 per cent, to $108.98 a barrel in London.

China's services sector slowed in September. Analysts say the index was 53.7 compared with 56.3 in August. It was released just days after a survey indicated that the country's manufacturing continues to slow.

China is the world's second largest economy and a huge importer of commodities like oil. Slower growth in that country could cut demand for oil.

And it's not only China. After years of rapid growth, Asia's developing economies now face much more modest prospects, the Asian Development Bank said Wednesday in a report that slashes growth forecasts for this year and next.

The ADB said growth in developing Asia, which includes giant emerging economies such as India, China and Indonesia, will slow to 6.1 per cent this year from 7.2 per cent last year and only partly rebound to 6.7 per cent in 2013. It had previously forecast growth of 6.9 per cent for 2012 and 7.3 per cent for 2013.

The disappointing reports were overshadowing signs of improvement in US service companies, which employ nearly 90 per cent of the work force. The Institute for Supply Management says its index rose in September at the fastest pace since March.

Meanwhile, the US government says crude inventories fell slightly last week but remain 8.4 per cent above year-ago levels. Gasoline supplies rose.

In other energy futures trading in New York, natural gas is down 16 cents, or 4.6 per cent, to $3.37 per 1,000 cubic feet, a day after hitting a high for the year.

Heating oil has fallen 5 cents to $3.07 per gallon, and wholesale gasoline has dropped 7 cents, or 2.5 per cent, to $2.80 per gallon.

- AP