Oil prices extended heavy losses Monday after Caterpillar, the world\'s largest maker of construction and mining equipment, cut its sales outlook, stoking oil demand fears. New York\'s main contract, light sweet crude for November, dropped $1.32 from Friday to finish trade at $88.73 a barrel, after having lost $2 last Friday. The contract expired at the close. In London, Brent North Sea crude for delivery in December settled at $109.44 a barrel, down 70 cents from Friday\'s closing level. The New York futures contract, fell into the red partly because of Caterpillar\'s third-quarter financial results, said John Kilduff at Again Kilduff. Considered a bellwether of the global economy, Caterpillar cut its profit and sales forecast for full-year 2012, suggesting a sharp slowdown in the fourth quarter, warning the global economy was weaker than it had expected. \"It is a real harbinger for the commodity sector -- not just oil but copper as well -- that demand looks poor into next year, and that is consistent that demand for next year is looking soft,\" Kilduff said. Investors also fretted about economic uncertainty in the United States, the world\'s biggest crude oil consumer, amid a tight presidential race ahead of the November 6 election and the tax increases and spending cuts, dubbed the \"fiscal cliff,\" scheduled to occur at year-end. \"Both commodity and equity markets are pulling back as general market sentiment turns south with US \'fiscal cliff\' uncertainty likely limiting the upside over the next 3-6 months,\" BMO Capital Markets analysts said. The oil markets kept an eye on unrest in the oil-rich Middle East. \"The ongoing fighting in Syria and Lebanon provide some support to the oil market giving upside momentum, while investors try to remain cautious about the Middle East crisis,\" said Sucden Financial analyst Jack Pollard. Oil prices tumbled more than $2 on Friday in London and New York as traders worried about demand following a batch of poor earnings reports from US companies and a European Union crisis summit that disappointed.