Oil fell overnight as rising fuel stocks and falling demand in top consumer the United States reinforced views that slowing economic growth and Europe's debt crisis will dent energy use, while a stronger dollar also kept prices under pressure.

Brent crude slid 32 cents to $112.08 a barrel down 12 per cent from this year's peak above $127.

The front-month October contract expires later today.US crude fell 28 cents to $88.63.

Europe's debt crisis is chipping away confidence and capping any oil rally. The continent's finance ministers have been warned confidentially of the danger of a renewed credit crunch as a "systemic" crisis in euro zone sovereign debt spills over to banks.

"The concern is that what starts as a financial crisis will drive the cost of borrowing to levels where it is difficult for the corporate world to invest, depressing economic activity and putting pressure on oil," said Michael McCarthy, chief markets strategist at CMC Markets in Sydney. "The dollar is also a key driver."

Asian stocks bounced overnight, yet investors remained wary that obstacles which policymakers face in Europe could weigh on the euro and Asian currencies in the medium term. The dollar index firmed 0.1 per cent.

World Bank president Robert Zoellick said yesterday that the world had entered a new economic danger zone and Europe, Japan and the United States all needed to make hard decisions to avoid dragging down the global economy.

Reflecting slowing growth, US total oil product demand over the past four weeks fell 0.9 percent from a year earlier, while gasoline use over the summer declined to an eight-year low, the Energy Information Administration said yesterday.

Gasoline stocks last week rose 1.9 million barrels, compared with analyst projections for a 500,000 barrel decline.