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NEW YORK: Oil prices tumbled to six-week lows on Tuesday on demand concerns amid an economic slowdown, while the threat of Tropical Storm Dolly in the Gulf of Mexico appeared to fade.
New York's main contract, light sweet crude for August delivery, dropped 3.09 dollars to close at 127.95 dollars a barrel.
After having rebounded more than two dollars on Monday, the New York benchmark contract headed lower, falling nearly 20 dollars since its record high level of 147.27 dollars, reached on July 11.
In London, Brent North Sea crude for September slumped 3.06 dollars to settle at 192.55 dollars.
"The first storm that will go into the Gulf is causing worry and nervous trading. The storm looks like at the worst it will shut down a small amount of Mexican production but gas seems like it will be less affected," said Phil Flynn, analyst at Alaron Trading.
The market had rebounded on Monday after falling by more than 16 dollars last week, as Dolly moved into the Gulf of Mexico and the international community tightened pressure on Iran to halt its nuclear programme.
Weather forecasters issued a hurricane warning Tuesday as Dolly churned over the Gulf of Mexico and threatened to land as a Category One storm near the US border with Mexico.
Some oil drilling companies evacuated personnel from their offshore rigs as companies waited to see where the storm would make landfall.
Around one quarter of US domestic crude production and 15 percent of natural gas output comes from the Gulf of Mexico.
The market fretted again about the sluggish US economy, the world's biggest energy consumer, and its impact on oil demand.
Investors were watching closely for developments in the Iran nuclear talks aimed at getting Tehran to halt its uranium enrichment programme, dealers said.
Weekend talks in Geneva made little progress and Iran has two weeks to respond to an international offer to halt its sensitive nuclear work, which the US and other major powers suspect is for making weapons.
Tehran insists its uranium enrichment programme is for civilian purposes.
Iran, the number-two oil producer in OPEC, reaffirmed on Tuesday that it was against any hike in the cartel's output despite continued high crude oil prices.
"The market is in a good situation," Oil Minister Gholam Hossein Nozari told reporters in Tehran on the sidelines of a petrochemical conference.
"In the next OPEC meeting, we are heading towards winter. I think that preserving the current situation is the most appropriate one," he added.
The Organisation of the Petroleum Exporting Countries was scheduled to hold its next regular meeting on September 9 in Vienna, where OPEC is headquartered. - AFP/de
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