Oil prices fell by more than $2 to below $113 a barrel this evening as a drop in crude imports by number two consumer China outweighed concerns over supply disruptions stemming from the conflict between Georgia and Russia.
US crude was down $2.30 to $112.90 a barrel, while London Brent crude fell $2 to $111.33.
China's crude imports unexpectedly fell 7% in July to a seven-month low, the steepest monthly drop since January 2005, as refiners balked at soaring crude costs.
The drop in Chinese imports added to wider concerns about demand. Consumption in the US and other developed economies has fallen due to high fuel prices.
Rising demand from China and other developing economies helped to send oil on a six-year rally that drove prices up sevenfold to their peak in July. Additional buying support this year came from investors buying oil to hedge against inflation and the weak dollar.
The dollar has been rallying against the euro since last week as investors have reassessed the impact of the US economic slowdown on the rest of the world.
Oil traders have pushed prices down despite the potential for the conflict between Georgia and Russia to disrupt key transportation links for Caspian Sea oil producers, including Azerbaijan and Kazakhstan.
