NEW YORK - Oil dropped yes­ter­day with the stock mar­ket as a sur­prise ref­er­en­dum in Greece threat­ened to de­rail a plan to bol­ster Eu­rope's banks. Bench­mark crude fell US$2.64, or 2.8 per cent, to US$90.55 per bar­rel in late morn­ing trad­ing on the New York Mer­can­tile Ex­change. In Lon­don, Brent crude lost US$1.80 at US$107.76. Prices dropped af­ter Greece's prime min­is­ter called a ref­er­en­dum in his coun­try on Eu­rope's debt deal. If Greeks re­ject the debt deal, it would in­crease the chances the coun­try would de­fault on its debt. That would weak­en banks in sur­round­ing coun­tries and slow down the Eu­ro­pean econ­o­my. Stocks sold off, with the ma­jor in­dex­es down about two per cent.

In the US, a pri­vate sur­vey showed that man­u­fac­tur­ing grew last month, but at a slow­er pace than in Sep­tem­ber. Man­u­fac­tur­ing ac­tiv­i­ty has grown for 27 straight months, ac­cord­ing to the In­sti­tute for Sup­ply Man­age­ment. The Sep­tem­ber read­ing in­di­cat­ed that fac­to­ries are strug­gling to ex­pand in a weak econ­o­my. Con­struc­tion spend­ing al­so rose slight­ly in Sep­tem­ber. At US$787.2 bil­lion, it's bare­ly half of what econ­o­mists con­sid­er healthy. In oth­er Nymex en­er­gy trad­ing, heat­ing oil fell six cents, or two per cent, to US$2.9972 per gal­lon while gaso­line fu­tures fell four cents to US$2.5637 per gal­lon.

AP