The price of oil fell more than $2 today, extending a slide from the previous session amid growing signs Asian demand could start to falter as consumer nations look to cut subsidies by raising local fuel prices.
US crude fell $2.02 to $126.83 a barrel by 9.55am, after dropping $3.34 yesterday and taking losses from last week's record high of $135.09 to nearly 6 per cent. London Brent crude was $1.69 down at $126.62 a barrel.
Traders said the market was seeing a fresh bout of technical selling, continuing the trend from the previous session.
Oil has also been knocked off its peak by growing evidence that consumers are struggling to cope with surging prices.
Demand for oil in top consumer the United States and other developed countries has been under pressure, and signs are emerging that it could spread across Asia as governments in the region take the knife to subsidies.
"There are signs that soaring energy prices are now even starting to cause ripples in the booming Asian economies," said Edward Meir at MF Global.
Smaller Asian oil consumers such as Taiwan, Indonesia and Sri Lanka have all recently raised domestic fuel prices, and India is also poised for a modest increase.
Analysts, however, expect the impact of hikes to be limited, and say that top Asian consumer and the world's second-largest oil consumer, China, appears set to resist pressure to raise rates until after the summer Olympics.
Soaring fuel costs have triggered a wave of protests around the world, with convoys of trucks converging on London yesterday, while in France fishermen blocked road and rail access to the fuel depot of the country's largest oil refinery at Gonfreville, owned by Total.