Oil fell below $133 a barrel on news that China will raise retail gasoline and diesel prices for the first time in 8 months to help refineries recoup losses from record oil prices.
Demand from China has been one of the main factors driving oil prices to a record near $140.
Earlier, oil had rallied to over $137 after rebels from Nigeria's oil producing Niger Delta warned oil and gas tankers to avoid the region or risk being attacked.
Meanwhile, traders say the market is cautious right now, ahead of an emergency meeting this weekend between producers and consumers in Saudi Arabia. There's speculation that the Saudis will reassure the market that they are willing to increase output to bring prices down.
That leads to our Fast Money Reader Poll. Do you think demand from emerging nations such as China is the main force behind the high the price of oil?
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