Oil fell more than $3 a barrel towards $121 on Tuesday, touching the lowest price since mid-May, as signs of weakening demand outweighed a disruption to Nigerian oil output. The drop also coincided with a firmer US dollar, which may have reduced the appeal of commodities to some investors, and comments from OPEC's president that oil could fall to $70 or $80 in the long term. “We still believe that crude's rallies are vulnerable and we would advise not buying into them,” said Edward Meir, analyst at MF Global who earlier on Tuesday said he expected an “eventual retreat” to $121-$122. US crude was down $3.30 at $121.43 a barrel by 1420 GMT and traded as low as $121.10, the lowest since May 15. Brent crude was off $3.36 at $122.48. The president of OPEC, Chakib Khelil, on Tuesday called the current price “abnormal” and said he did not think the producer group should consider cutting output should prices continue to fall as markets were now balanced. Khelil said oil could fall to $70 to $80 in the long term, if the US dollar continued to strengthen and geopolitical concerns eased. Oil has fallen from a record peak of $147.27 on July 11, pressured by signs that high prices and an economic slowdown are curbing demand especially in the US. The CEO of BP Plc said on Tuesday he saw demand destruction of 5 to 10 percent for gasoline in developed OECD economies.
