Oil prices end down after passing $143 a barrel for the first time

NEW YORK - The price of crude oil hit yet another record on the last day of a tumultuous first half, spurting past $143 a barrel before ending lower on demand fears and a resilient dollar.

Crude has shot up nearly 50 percent since the start of the year, in large part on the dollar's troubles, and analysts expect that trend to remain intact as the second half of 2008 begins.

On Monday, 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 a barrel on the New York Mercantile Exchange. In early electronic trading, the contract hit a record $143.67. Meanwhile, retail gasoline reached a new national average of $4.086 a gallon, according to a survey of stations by AAA, the Oil Price Information Service and Wright Express. The previous record of $4.08 was reached June 16.

The Energy Information Administration reported that oil usage in April was lower than previously estimated, falling 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.

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.

Geopolitical tensions, particularly surrounding Iran, continue to boost oil prices. Traders were digesting reported comments from the commander of Iran's Revolutionary Guards, who warned that if his country is attacked, Tehran would strike back by barraging Israel with missiles. In a report published Saturday in the conservative Jam-e-Jam newspaper, Gen. Mohammad Ali Jafari said that if Iran were provoked, it would also move to control a key oil passageway in the Gulf.

Iran is the world's fourthlargest oil exporter and about 60 percent of the world's oil passes through the strategic Strait of Hormuz.

Global supply also remains a concern. The Iraqi government opened six oil fields to international bidding Monday as the nation attempts to boost daily production by 60 percent.

The potential participation of big Western companies like BP PLC, Chevron Corp., Exxon Mobil Corp., Royal Dutch Shell PLC and Total SA in Iraq's oil industry has been criticized in recent weeks following published reports that several were close to signing no-bid contracts with the Iraqi government.

Those contracts were expected to be announced Monday, but Iraqi Oil Minister Hussain al-Shahristani instead named 35 companies that would be qualified to bid on service contracts for the oil fields of Rumeila, Zubair, Qurna West, Maysan, Kirkuk and Bay Hassan.