Oil settled below $94 per barrel Tuesday as investors continued to worry about weak consumer spending and sluggish economic growth.
Benchmark West Texas Intermediate crude for September delivery lost $1.10 to settle at $93.79 per barrel on the New York Mercantile Exchange. Brent crude, which is used to price many international oil varieties, fell 35 cents to settle at $116.46 per barrel on the ICE Futures exchange in London.
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Crude has dropped for five straight trading days, losing almost $4 a barrel, as oil supplies grew in the U.S. and reports on manufacturing pointed to tepid growth in the U.S. and China. Analysts expect the Energy Department to report another increase in U.S. reserves on Wednesday.
The Commerce Department said Tuesday that consumer spending fell in June for the first time in nearly two years. The report also said that incomes for working Americans grew by the smallest amount in nine months.
Adding to the lackluster demand picture, MasterCard SpendingPulse's weekly survey of gas stations found that drivers bought less gas for the 19th consecutive week.
PFGBest analyst Phil Flynn said if it weren't for the upcoming hurricane season and a weaker dollar, the price of oil would be much lower.
"We should be trading $10 per barrel below where we are," Flynn said.
Traders are keeping close watch on Tropical Storm Emily, which is expected to reach Haiti within a day. Storms that move into the Gulf of Mexico can disrupt the network of oil production platforms and pipelines in the area and force oil companies to evacuate personnel. That slows down production operations and cuts into U.S. supplies, so prices tend to rise. Current forecasts have Emily staying in the Atlantic, away from the Gulf and on a path for Florida and the Southeast U.S.
Analyst Addison Armstrong noted that about 2.3 percent of oil production and 1 percent of natural gas production in the Gulf of Mexico remains temporarily shut down after Tropical Storm Don swept through the Gulf last week.
The dollar fell Tuesday from early highs against other currencies. Oil is priced in dollars and usually moves higher as the dollar falls and makes crude cheaper for investors holding foreign currency.
Meanwhile, gas pump prices dropped for a fourth day to a national average of $3.703 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 16.2 cents more expensive than it was at the beginning of June, and it's almost 97 cents higher than the same time last year.
In other Nymex trading for September contracts, heating oil fell less than a penny to settle at $3.0916 per gallon and gasoline futures lost 1.67 cents to settle at $3.0373 per gallon. Natural gas gave up 3.3 cents to settle at $4.155 per 1,000 cubic feet.