Price of crude oil tumbles

Crude oil fell to its lowest close in more than a month yesterday on concern that reduced U.S. economic expansion will cut fuel demand at a time of higher-than-normal supplies.

Oil has fallen 9 percent from its Aug. 1 record amid concerns that subprime-borrowing losses and declining stock prices may hamper U.S. consumer spending and slow the economy. The slowdown comes at a time when oil inventories are 11 percent above the five-year average, Energy Department data show.

Crude oil for September delivery fell 56 cents, or 0.8 percent, to $71.59 a barrel on the New York Mercantile Exchange, the lowest close since July 3. Oil reached a record of $78.77 Aug. 1.

"Maybe we aren't going to have the demand that people thought we were going to have" for oil, said Gordon Elliott, risk-management specialist at FCStone L.L.C. in St. Louis Park, Minn.

Crude oil was also pulled lower by a U.S. government report Wednesday that showed gasoline demand may have peaked for the year.

Motor-fuel deliveries from U.S. refineries and terminals declined to 9.58 million barrels a day last week, the lowest since June, the report showed. U.S. gasoline consumption usually peaks from June to the beginning of September because of summer holiday travel.

Brent crude oil for September settlement fell 78 cents to $70.21 a barrel on London's ICE Futures exchange, the lowest close since June 26.

U.S. supplies of gasoline dropped 1.72 million barrels, to 203 million barrels, in the week ended Aug. 3, 2.6 percent below the five-year average. Crude-oil inventories fell 4.14 million barrels, to 340.4 million barrels.

Also, U.S. government forecasters reduced the number of hurricanes expected to form in the Atlantic Ocean this year to a range of seven to nine, down from as many as 10 forecast in May. Oil and gasoline prices surged to records after Hurricane Katrina devastated oil platforms, pipelines and refineries on the Louisiana and Mississippi coasts in August 2005.