Oil falls below $88 on U.S. recession fears

LONDON (Reuters) - Oil prices extended their decline on Wednesday to below $88 a barrel as poor U.S. economic data reinforced fears that the world's largest economy is on the brink of a recession, knocking stock markets lower.

London Brent crude fell 75 cents to $88.07.

Financial markets continued their fall for a second day after the Institute of Supply Management reported on Tuesday that activity in the U.S. services sector slumped to a level not seen since the 2001 recession.

Oil prices were also weighed down by expectations the U.S. Energy Information Administration (EIA) weekly report would show a further rise in crude oil inventories.

Forecasts for normal or slightly above normal temperatures in the U.S. Northeast for the next six to 10 days were also keeping a lid on oil prices.

OPEC's concerns about slowing global demand prompted the group to keep supply steady at last Friday's meeting and some hawkish members have called for a vote to cut output at its March 5 meeting.

(Reporting by Fayen Wong in Sydney and Randy Fabi in London; Editing by James Jukwey)