Despite the losses, Brent and US crude hovered near unchanged for the week in afternoon trading in New York, as prices had jumped earlier in the week on tropical weather threats to US production and strong equities after a ruling by Germany’s top court briefly soothed euro zone fears.

The euro fell to a 6-1/2-month low against the dollar as investor risk aversion increased on news that Juergen Stark, a member of the European Central Bank’s Executive Board, will step down because of a conflict over the central bank’s controversial bond-buying.

The euro pared losses after Greece’s finance minister said rumors that Athens would default over the weekend was market speculation designed to hurt the euro.

The dollar index, measuring the greenback against a basket of other currencies, gained 1 percent.

Dollar strength can pressure dollar-denominated oil by making it less affordable for consumers holding other currencies and investment can be attracted to other markets offering better returns.

US stocks fell more than 2 percent as Stark’s surprise move reinforced concerns over the region’s debt and as investors remained skeptical about how much of US President Barack Obama’s $447 billion proposal to generate jobs would make it through Congress.

“Worries about the economy are resurfacing. Oil is tracing the plunging equity markets and strong dollar,” said Gene

McGillian, analyst at Tradition Energy in Stamford, Connecticut.

News that about 2 million barrels of Libyan crude have been offered via a tender, making it the largest volume to come to market since civil war erupted in February, was another bearish factor, especially for Brent.

ICE Brent October crude fell $2.10 to $112.45 a barrel by 1:38 p.m. EDT (1738 GMT), above its $110.93 low and having reached $115.17. A finish above last Friday’s settlement of $112.33 is needed to post a weekly gain.

Brent fell under its 100-day moving average at $114.22 and the 60-day MA of $112.69, according to Reuters data, but bounced back ahead of its 30-day MA at $110.68.

US October crude fell $2.45 to $86.60 a barrel, having dropped as low as $85.64. Last Friday’s settlement was $86.45.

The Brent crude spread to its US counterpart was at $25.73 a barrel, having narrowed after reaching a record $27.23 on Tuesday.

Brent trading volume outpaced US crude, surpassing a half-million lots traded, 7 percent above its 30-day average.

US volume was 34 percent under its 30-day average.

US gasoline and heating oil futures also fell sharply. Gasoline slumped more than 4 percent intraday as last Monday’s Labor Day holiday marked the end to the US summer driving season.

The increasing recession fears ramp up the pressure on G7 finance chiefs meeting on Friday to take action to revive economic growth.

International Monetary Fund chief Christine Lagarde urged policymakers to use all available tools to fuel growth and welcomed Obama’s plan for job creation.

The G7 meeting and Lagarde’s remarks follow Thursday’s call for central banks to keep interest rates low from the Organization for Economic Cooperation and Development. The OECD said the outlook for economic growth in developed countries has worsened in the last three months.

Oil investors continued to eye Tropical Storm Nate drifting northwestward in the Bay of Campeche and Tropical Storm Maria in the Atlantic basin east of the Lesser Antilles. Nate could become a hurricane as early as Friday.

Oil companies continued to restore some Gulf of Mexico production shut because of Tropical Storm Lee. Royal Dutch Shell said all its production shut due to Lee had been restored.