Associated Press
June 4, 2008

Oil prices dropped below $124 a barrel Wednesday and after Federal Reserve Chairman Ben Bernanke signaled that inflation had become a more prominent concern.

By the afternoon in Europe, light, sweet crude for July delivery was down 63 cents at $123.68 a barrel in electronic trade on the New York Mercantile Exchange. The contract fell $3.45 to settle at $124.31 a barrel in the previous day’s session.

That was oil’s lowest settlement price for a front-month contract on Nymex since May 15. Prices are now more than $11 below the trading record of $135.09 a barrel hit on May 22.

“The stars for a significant correction in crude oil are lining up,” U.S. analyst and trader Stephen Schork said in a research note.

In London, July Brent crude dropped 84 cents to $123.74 a barrel on the ICE Futures exchange.

The Organization for Economic Cooperation and Development forecast several quarters of weak growth for most of its 30 members, which include the U.S., Japan, and several European countries, and on Wednesday cut its economic growth outlook through next year.

Bernanke’s comments about rising prices sent the dollar higher and diminished the chance that oil would exceed the record highs of last month in the short term.

Evidence continues to mount that oil prices, nearly twice what they were a year ago, have finally cut into demand.

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