Crude oil futures fell for a third straight day Tuesday amid expectations that a recent spike in gasoline prices may undermine demand in the United States, the world's biggest energy consumer.
The downgrading of Ophelia, a storm off the coast of North Carolina, to tropical storm from minimal hurricane also eased concerns that it would interrupt recovery efforts along the U.S. Gulf of Mexico coast in the wake of Hurricane Katrina.
Light, sweet crude for October delivery fell 19 cents to $63.15 a barrel by midday in Europe on New York Mercantile Exchange. On Monday, the contract settled at $63.34, down 74 cents.
Gasoline edged down to $1.8725 a gallon, while heating oil was essentially flat at $1.8125 a gallon.
October Brent crude oil futures on London's International Petroleum Exchange fell 23 cents to $61.57 a barrel.
Crude prices have been dropping since Friday.
"The main reason that prices are falling now is that demand, especially in the United States, has been impacted by high prices," said commodity strategist David Thurtell of the Commonwealth Bank of Australia in Sydney.
"Traders are afraid this will affect consumer and business confidence and weaken the world economy," he said.
Last week, a U.S. Energy Department report predicted a 100,000 barrel per day increase in U.S. petroleum demand this year, down from 160,000 barrels per day a month earlier. This was "largely due to sharply higher prices," the department said.
Nymex crude has dropped from its intraday high of $70.85, reached Aug. 30 after Katrina hit, but remains more than 40 percent higher than year-ago levels.
The end of the U.S. summer driving season also supported expectations of a significant slowdown in U.S. demand.
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