Crude oil falls back to $126

Crude oil fell to a one-week low on concern record fuel prices will cut consumption at the height of the US driving season.

US gasoline pump prices reached an all-time high May 26, curbing demand from motorists at the start of the summer, when fuel use typically peaks.

Soaring fuel costs coupled with a housing slump pushed US consumer confidence to the lowest level since October 1992, a report showed on Tuesday.

"The high price of fuel is now finally affecting the man in the street," said Robert Laughlin, senior broker at MF Global Ltd in London.

"Global economies are creaking at present, with US, German and French consumer confidence data all at record lows."

Crude oil for July delivery dropped as much as $2.48 a barrel, or 1.9 percent, to $126.37 a barrel on the New York Mercantile Exchange.

That's the lowest since May 19 and brings the contract's losses to more than $5 in two days.

Oil traded for $127.17 at of 11:56 am London time.

Oil's drop was part of a wider decline across commodities markets. Gold, platinum and silver all fell in London. Rice futures plunged for a third day to a two-month low.

On Tuesday, oil fell more than $3 a barrel to close at $128.85, the biggest drop for a single trading session since April 29. Futures reached a record $135.09 on May 22 and have doubled in the past year.

Brent crude oil for July settlement was at $127.07 a barrel, down $1.24, on London's ICE Futures Europe exchange at 11:57 am London time.

Agencies

(China Daily 05/29/2008 page16)