U.S. crude oil futures closed more than $3 lower on Tuesday, extending a slide as a stronger dollar, technical weakness and demand concerns kept the pressure on the oil complex.
On the New York Mercantile Exchange, July crudesettled at $128.85, down $3.34. The price marked an 8-day low for the commodity.
The New York Mercantile Exchange was closed Monday for the U.S. Memorial Day holiday.
London Brent crude was also lower.
The losses came as the U.S. dollar rose broadlyafter April U.S. new-home data showed an unexpected rise, dragging oil off record highs over $135 a barrel struck last week.
Oil price have doubled in the past year as speculators pile into commodities as a hedge against inflation and the weaker dollar, extending a six-year rally as supply struggles to keep pace with rising demand in emerging economies like China.
Prices rose Monday when Royal Dutch Shell said it was forced to cut production in Nigeria after rebels from the southern Niger Delta blew up an oil pipeline.
Further weakness Tuesday came from signs some Asian countries could ease subsidies that have kept down prices, raising concern demand in the region could falter.
Demand in top consumer the United States is already under pressure from high prices.
"Crude is looking toppy due to very obvious demand destruction in the U.S. and impending demand fall off in Asia," said Nauman Barakat, senior vice president at Macquarie Futures USA.
Over the past week Indonesia, Taiwan, Sri Lanka and Bangladesh have either raised regulated fuel prices or pledged that they will, forced into unpopular action by the unsustainable cost of subsidies.
The weakness in demand has helped pull down near-term prices against crude futures five years out and beyond, where some analysts are concerned resource management in producer countries could keep supply under pressure.
Another Record at the Pump for US Consumers
The average price U.S. consumers paid for gasoline is about a nickel away from hitting the $4 a gallon threshold, after jumping 14.6 cents over the last week, the federal Energy Information Administration said Tuesday.
The national price for regular, self-service gasoline averaged a record $3.94 a gallon, up 73 cents from a year ago, due to high crude oil costs that are passed on to consumers at the pump.
The average price for gasoline already tops $4 a gallon in 11 states and the District of Columbia.
The EIA's latest weekly survey of service stations found gasoline was the most expensive on the West Coast at $4.03 a gallon, up 14.6 cents. Chicago had the highest city price at $4.17, up 15.3 cents.
The Gulf Coast states had the lowest regional price at $3.83 a gallon, up 14 cents. Houston had the lowest pump price, up 13.7 cents at $3.79.
Separately, the price truckers paid for diesel fuel soared 22.6 cents to a record $4.72 a gallon, up $1.91 from a year ago, the EIA said.
The retail diesel fuel price has risen 55 cents a gallon in the last month.
The central Atlantic states had the most expensive diesel at $4.91 a gallon, up 23 cents. The Rocky Mountain region had the cheapest fuel at $4.65, up 21 cents, the EIA said.