Oil prices end down after topping $143 a barrel

A government report lowering oil and gasoline demand estimates and a dollar hanging tough nullified investor concerns over supply, a fragile global economy and continued tensions in the Middle East.

"What this shows is that demand destruction in the U.S. is a lot larger than previously thought," said Phil Flynn, an energy analyst at Alaron Trading Corp. in Chicago. "There are more signs that demand is deteriorating."

Light, sweet crude for August delivery lost 21 cents to settle at $140.00 a barrel on the New York Mercantile Exchange. In early electronic trading, the contract hit a record $143.67.

The Energy Information Administration reported that oil usage in April was lower than previously estimated, falling to 4.2 percent to 19.768 million barrels per day from 20.631 million. That was 3.9 percent lower than in April 2007 and the lowest level for the month in six years.

The price of oil, which began 2008 at $96 a barrel, has risen in part on expectations of higher demand in China and other developing nations. But its almost relentless advance has also forced consumers and businesses to cut back the amount of gas and oil they use; it is also posing a threat to U.S. economic growth that could further slice into demand.

A hardier dollar also sent oil prices lower on Monday. Often, oil futures are used as a hedge against a weaker dollar.

"A lot of the momentum from late last week was the expectation we would continue to see a weaker U.S. dollar. When that didn't materialize, we had some profit-taking," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

The dollar rose against the 15-nation euro after the Chicago Purchasing Managers' index came in better than expected. The index for June rose to 49.6 from 49.1 in May, topping estimates of 49.1. The report is seen as a precursor for the national Institute for Supply Management report, to be released Tuesday.

But there was little expectation in the market that Monday's trading was the start of a turnaround in the dollar that would send oil falling much further. The dollar has weakened on expectations the Federal Reserve Board won't soon raise interest rates as the U.S. economy struggles with low growth. The Fed left its benchmark rate unchanged last week.