Oil falls towards $93 on U.S. economic worries

By Randy Fabi

LONDON (Reuters) - Oil eased towards $93 a barrel on Friday, extending losses for the third consecutive day, on fears that a possible U.S. recession would weaken fuel demand from the world's largest energy consumer.

U.S. crude fell 38 cents to $93.33 a barrel by 4:14 p.m., adding to Thursday's $1.96 decline. London Brent crude traded 51 cents lower at $91.71 a barrel.

Former U.S. Treasury Secretary Lawrence Summers said on Thursday the chance of a U.S. recession was more than 50 percent.

"The supply situation for crude remains very tight, but the looming 'R' word seems to have aroused more fear in market participants' psyches," said MF Global.

U.S. Federal Reserve Chairman Ben Bernanke said on Thursday the central bank was ready to take substantial measures to shore up the economy, raising expectations for a half-point interest rate cut at the Fed's January 29-30 meeting.

Bernanke's comments helped ease a growing sense of gloom about the U.S. economy. A recession would hit demand from the world's top oil consumer.

Another Fed rate cut could fuel selling of the already weak U.S. dollar, potentially boosting crude and other dollar-denominated assets, which would become relatively cheap.

Oil has been trading above $90 for a month and hit a record high of $100.09 a barrel on January 3.