Crude has fallen to near eight-month lows from $106 less than two months ago amid signs economic growth and oil demand are slowing in the U.S., Europe and China.

Traders will be closely watching the tightening of European sanctions July 1 against Iran over the country's nuclear program. Some analysts expect increased crude output by Saudi Arabia and other producers and continuing Iran oil sales to China, Japan and India should offset any reduction in Iran's exports.

"This will certainly blunt some of the impact of the E.U. sanctions" on overall oil supply, said Richard Soultanian, an energy analyst with NUS Consulting. "We expect the results of the upcoming implementation of the EU embargo to be muted."

Soultanian said he expects crude to soon drop to as low as the mid-$60s.

In other energy trading, heating oil was down 0.1 cent at $2.57 per gallon while gasoline futures slid 1.1 cents at $2.51 per gallon. Natural gas added 3.2 cents at $2.80 per 1,000 cubic feet.