Oil prices fall to six-week low

Hurricane fears had pushed oil prices up on Monday

Oil prices have fallen to a six-week low as US energy demand fell and a hurricane in the Gulf of Mexico appeared to be missing oil facilities.

US light sweet crude fell as low as $125.63 a barrel, well off its 11 July peak above $147 a barrel.

Petrol consumption in the US is 2.2% below last year's levels, according to a MasterCard survey, suggesting that higher prices are hitting demand.

But oil prices are still almost 30% above their level at the start of 2008.

$20 decline

London Brent crude fell $3.23 to $129.38 a barrel on Tuesday.

"We've now seen more than a $20 decline in the crude oil market from the highs and this suggests that we've seen enough of a shift in the supply and demand balance on a larger scale to cap the market," said Tim Evans, energy analyst for Citi Futures Perspective.

There was relief in the market that the approaching Hurricane Dolly would not have a big impact on oil and gas production.

The US Minerals Management Service announced earlier on Tuesday that only 5% of oil and gas production in the US had been shut down.

The dollar strengthening against the euro also put pressure on oil prices as crude has been used as a hedge against the weakening US currency.