Crude oil futures prices were lower Tuesday on fresh concerns over European's economic health.

After an intraday high of $88.05 a barrel a day earlier on a weaker dollar and a rally in equities, crude broke below $86 as the dollar gained on the euro. Germany, Europe's largest economy, posted slower-than-expected growth of just 0.1% in the second quarter, compared with an expected rise in gross domestic product of 0.4%.

The disappointing economic data came as the market awaits the outcome of a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy to discuss the euro zone debt crisis. A press conference is scheduled for 1630 GMT (12:30 p.m., EDT).

U.S. data released early Tuesday added to the worrisome economic scene. New home construction in July dropped by 1.5%, after gains in the previous two months. The drop, though, was smaller than expected. The price of imported goods rose 0.3% in July, while forecasters called for no change in the figure.

Light, sweet crude oil for September delivery on the New York Mercantile Exchange was down $1.93 a barrel, or 2.2%, lower at $85.95 a barrel, after moving in a range of $85.62 to $87.69 a barrel. September ICE Brent crude oil, ahead of its expiration, was $1.31 lower, at $108.60 a barrel.

Traders said they expect a push toward $85 a barrel in U.S. crude ahead of the expiration Wednesday of September crude oil options, as many players have built up positions at that level.

The market will take its near-term cues from U.S. inventory data which is expected to show a modest 400,000-barrel decline in crude oil stocks, even as refiners trim operations by 0.4 percentage point from 90% a week earlier. The data, for the week ended Aug. 12, is also expected to show gasoline stocks fell 1.3 million barrels, while distillates (diesel/heating oil) rose by 700,000 barrels, according to analysts surveyed by Dow Jones Newswires.

The American Petroleum Institute, an industry trade association, releases its figures for the same period at 4:30 p.m. EDT on Tuesday, while the federal Energy Information Administration, the statistical and analytical wing of the Energy Department, is scheduled for release at 10:30 a.m., EDT on Wednesday.

Jim Ritterbusch, president of Ritterbusch and Associates, said the weak German economic performance is "heightening recessionary concerns" and fresh worries could spur a new wave of liquidation. A drop below $75 in U.S. crude or below $100 in Brent is "realistic," he said, as global supply cover is adequate, "especially when viewed against weakening demand."

September-delivery gasoline blendstock futures were 3.2 cents, or 1.1%, lower at $2.8425 a gallon, while September heating oil futures were 2.22 cents, or 0.8% lower, at $2.9219 a gallon.