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Oil extends decline, drops below $128

(Agencies)
Updated: 2008-07-23 16:30

SINGAPORE -- Oil prices slipped further Wednesday after tumbling more than $3 a barrel in the previous session as a hurricane looked likely to spare key oil installations in the US Gulf of Mexico.

Related readings:  Oil prices tumble in biggest weekly drop ever  Energy experts sounds alarm over oil  Investors eye coal-to-oil conversion biz in Ningxia

Traders in Asia awaited the release of US oil supply data later in the day that was expected to show a rise in gasoline stocks amid weakening demand in the world's largest energy consumer.

Light, sweet crude for September delivery fell 82 cents to $127.60 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell $3.40 to settle at $128.42 in the previous session.

The August contract fell $3.09 to settle at $127.95 a barrel as it expired at the end of floor trade.

The overnight sell-off dragged oil prices to their lowest level since early June and was crude's fifth decline in the last six sessions.

Prices fell as Dolly -- a tropical storm that spun into a hurricane on Tuesday -- headed toward the US-Mexico border but grew increasingly unlikely to threaten key oil supply in the Gulf. That gave traders one less reason to buy as a strengthening dollar helped keep prices in check.

The drop offered further evidence that investors are now quickly pulling money out of the market, after driving prices to a record above $147 only a week and a half ago. It was also a reminder that, with traders for the moment turning bearish, the absence of major news can push the market down -- just as incremental supply concerns previously drove prices sharply higher.

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