Benchmark West Texas Intermediate crude for September delivery was 74 cents lower, at $94.15 per barrel in morning trading on the New York Mercantile Exchange. Earlier, it was as low as $93.75. Brent crude, which is used to price many international oil varieties, lost 43 cents at $116.38 per barrel on the ICE Futures exchange in London.
Crude has dropped for four straight trading days as oil supplies grew in the U.S., and reports on manufacturing pointed to tepid growth in the U.S. and China. PFGBest analyst Phil Flynn said if it weren't for the upcoming hurricane season and a weaker dollar, oil would be much lower.
"We should be trading $10 per barrel below where we are," Flynn said.
Traders are keeping close watch on Tropical Storm Emily, which is expected to reach Haiti within a day. Storms that move into the Gulf of Mexico can disrupt the network of oil production platforms and pipelines in the area and force oil companies to evacuate personnel. That slows down production operations and cuts into U.S. supplies, so prices tend to rise. Current forecasts have Emily staying in the Atlantic, away from the Gulf and on a path for Florida and the Southeast U.S.
Analyst Addison Armstrong noted that about 2.3 percent of oil production and 1 percent of natural gas production in the Gulf of Mexico remains temporarily shut down after Tropical Storm Don swept through the Gulf last week.
The dollar fell Tuesday from earlier highs. Oil is priced in U.S. currency and usually moves higher as the dollar falls and makes crude cheaper for investors holding foreign currency.
Meanwhile, gas pump prices dropped for a fourth day to a national average of $3.703 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 16.2 cents more expensive than it was at the beginning of June, and it's almost 97 cents higher than the same time last year.
In other Nymex trading for September contracts, heating oil was virtually unchanged at $3.0964 per gallon and gasoline futures fell 1 cent to $3.0459 per gallon. Natural gas lost 3 cents at $4.162 per 1,000 cubic feet.