NEW YORK - Oil prices dropped below $129 a barrel yesterday, falling sharply on a growing sense that soaring prices for crude and gasoline have cut demand for fuel during the normally busy summer driving season.
At the pump, meanwhile, the national average price for regular-grade gasoline was unchanged from Monday at $3.94 a gallon.
The price also was unchanged from Monday in the Philadelphia area - at an average of $3.97 a gallon in the city and its four suburban counties in Pennsylvania, and $3.81 in the three South Jersey counties.
The stability in the nationwide average yestersday led to renewed speculation that gasoline prices might follow the normal seasonal pattern of peaking around Memorial Day and then declining during the summer.
"I think that we're going to see that that is the peak or very close to it," said Michael Lynch, president of Strategic Energy & Economic Research Inc., of Winchester, Mass.
Yesterday's oil-price decline was notable in that it came in the face of news of supply problems in Mexico and Nigeria that could have driven prices higher. That is an indication that demand concerns are weighing on the market, giving investors reason to pull back from record-high oil prices reached last week, said Stephen Schork, an analyst and trader in Villanova, Pa.
Light, sweet crude for July delivery fell $3.34 to settle at $128.85 a barrel on the New York Mercantile Exchange. It was oil's biggest one-day decline since March 31. Prices peaked Thursday at $135.09 a barrel.
Lynch said he believed investors were selling on recent data showing that Americans were driving less because of high fuel prices.
"If present trends continue, we could be heading for the first annual drop in gasoline consumption in some 17 years," Edward Meir, an analyst at MF Global UK Ltd., said in a research note.