Oil fell to below $130 today on signs that a demand slowdown in some markets may spread as major Asian consumers review their fuel subsidy policies.
US crude fell $1.00 to $130.03 a barrel by 12.08pm. London Brent crude dropped by $1.08 to $129.85.
Prices have fallen from a record high above $135 hit last week partly because of growing signs that consumer countries have trouble coping with surging prices.
"There is apparent demand destruction going on in the US," Olivier Jakob with Petromatrix said.
"In Asia, it is not just India, other countries are reviewing fuel subsidies. These countries are suffering from hikes in global commodities prices, not just oil."
US oil demand in March fell to the lowest level for that month in five years, Washington's Energy Information Administration said yesterday.
In Britain, gasoline demand in April fell 7 per cent from a year ago, government data showed yesterday.
Asian countries have been reviewing the fuel subsidies which have sheltered drivers from the shock of steep price rises, under pressure from oil companies paying for costly crude and making a loss selling cheap gasoline and diesel.
India's oil minister, Murli Deora, said today that the government will take a decision on raising fuel prices in the next two to three days.
Taiwan, Indonesia and Sri Lanka have already raised domestic fuel prices.
Traders were also waiting for US weekly oil inventory figures due out later today.