Oil Drops Again

It looks like the oil bubble may have burst.

NEW YORK (al-AP) -- Oil prices kept falling Tuesday, sinking as low as $118 a barrel on growing concerns that a U.S. economic slowdown and high energy costs are curbing consumer demand for gasoline and other petroleum products.

Crude's decline is giving Americans more relief at the pump. A gallon of regular gasoline on average fell another penny overnight to $3.871, according to auto club AAA, the Oil Price Information Service and Wright Express. Gas prices have fallen four straight weeks for the first time in December; prices are off 5.9 percent from their July high as U.S. motorists cut back on their driving to save money.

A day after plunging as much as $5 a barrel in a dramatic sell-off, crude continued its downward trend Tuesday as traders sold oil contracts on the belief that prices are still too high in relation to demand and have further room to fall.

Light, sweet crude for September delivery lost $1.86 to trade at $119.55 a barrel on the New York Mercantile Exchange, after earlier falling to $118, the lowest level since May 5.

Crude has now fallen more than $25 since reaching a trading high of $147.27 on July 11.

"The market psychology has finally shifted," said Stephen Schork, an analyst and trader in Villanova, Pa., adding that "$4-a-gallon gasoline has clearly killed demand."

No kidding on that last line. Still waiting for the corresponding drop at the pump. Even while oil prices were falling, the price at the pump in Racine and Kenosha jumped 10-15 cents a gallon over the past two days.