Falling demand for gasoline in the US has forced oil prices down
The price of oil has recorded its biggest weekly drop, slipping under $130 a barrel on Friday.
Crude prices have fallen more than 11% over the past four days, knocking $15 off a barrel of oil in that period.
Fears of high prices weakening the US economy set oil off on one of the biggest weekly falls since 1983.
Sweet crude for August delivery fell 41 cents to settle at $128.88 in New York - far off the record of more than $147, reached one week ago.
A key reason for this week's decline was evidence of falling demand for gasoline in the US, despite it being the peak summer driving season, analysts said.
Another key factor was the easing of tensions in the Middle East and Nigeria, both major production points for crude.
"From both a demand and supply perspective, the fundamental picture has turned more bearish," said Walter de Wet, an analyst at Standard Bank in Johannesburg.
It has been a volatile month for commodities. Oil prices edged up after the IMF raised its global economic forecast for 2008 earlier this week.
And although a pipeline in Nigeria belonging to Italian energy group Eni was blown up, another pipeline belonging to Chevron in the country has been repaired after sabotage in June.
Also, the US said on Wednesday it was sending an envoy to Geneva to join nuclear talks with Iran for the first time.
Military action against Iran could lead to the closure of the Straits of Hormuz, through which nearly half of the world's traded oil moves.
Roy Mason, of oil consultancy Oil Movements, estimated on Thursday that Opec oil exports, excluding Angola and Ecuador, would rise by 560,000 barrels per day in the four weeks to the beginning of August.