Oil prices fell below $114 a barrel, reaching their lowest point in more than three months after the dollar muscled higher and OPEC predicted world demand for energy will keep falling.
U.S. light, sweet crude fell $1.24, or 1.1 percent, settling at $113.77, after earlier falling as low as $111.34, its lowest since May 2. That intraday low was more than $35—or over 20 percent—below oil's July 11 trading record above $147.
London Brent crude also fell.
As high energy costs force countries around the globe to cut back on consumption, crude prices have plummeted and are now within striking distance of $100 a barrel, a level first reached Feb. 19.
At the pump, retail gas prices also continued to fall, with a gallon of regular shedding about half a penny overnight to a new national average of $3.771, according to auto club AAA, the Oil Price Information Service and Wright Express. Gas peaked at $4.114 on July 17.
Crude fell after the dollar gained strength against the euro on U.S. data showing that industrial output rose more than expected in July. The 15-nation euro has lost some of its luster compared to its American rival amid growing evidence that European economies are slowing. The euro bought $1.4672 in trading Friday, down from $1.4811 late Thursday.
A rising dollar typically pushes oil prices lower as investors who buy crude and other commodities as hedges against inflation start dumping their positions to cut their losses. A stronger greenback also makes dollar-denominated commodities more expensive to overseas buyers, further eroding demand.
"The dollar is on fire again so that's causing people to re-evaluate everything," said Phil Flynn, oil analyst at Alaron Trading in Chicago. "It means oil prices could fall dramatically. We could see prices get to double digits if this continues."