NEW YORK — Oil resumed its slide on Wednesday and took the stock market down with it.

The catalyst for the latest sell-off in oil was an OPEC report that projected demand for its crude would sink next year to levels not seen in more than a decade. Demand for the cartel’s oil has been eroded as other countries such as the U.S. have stepped up production.

The decline in the price of oil accelerated after the U.S. Energy Department reported that domestic oil inventories had increased. Analysts expected a decline.

Benchmark U.S. crude fell $2.88 to close at $60.94 a barrel. The price of oil has now dropped more than 40 percent from a peak of $107 in June.

The wider fallout from the plunge in the price of oil may be starting to worry investors. While lower oil prices are good for consumers and some industries, if prices continue to drop some producers may be forced out of business.

“The slide in oil has been pretty dramatic,” said Randy Frederick, managing director of trading and derivatives with the Schwab Center for Financial Research. “There is an over-reaction to these lower energy prices, which is what we seem to be seeing right now, where it becomes more panic selling.”

The Standard & Poor’s 500 index fell 33.68 points, or 1.6 percent, to 2,026.14. The decline was the biggest for the index since Oct. 13.

The Dow Jones industrial average dropped 268.05 points, or 1.5 percent, to 17,533.15. The Nasdaq composite fell 82.44 points, or 1.7 percent, to 4,684.03.

Falling oil prices and concerns about global growth have pushed stocks down sharply since they closed at record levels on Friday. The market rose that day after the government reported a jump in hiring in November that put the U.S. on track for the healthiest year for job creation since 1999.

The resilience of the U.S. economy has prompted investors to speculate that the Federal Reserve will signal next week– it meets Tuesday – that it is nearing its first rate increase in more than eight years.