NEW YORK, USA - OIL prices tumbled on Tuesday amid market concerns about weakening demand in the United States, the world's largest energy consumer.

New York's main contract, light sweet crude for September, slumped 2.54 dollars to US$122.19 (S$167.02) a barrel.

The benchmark futures contract reached a session low of US$120.42, its lowest level since May 6. It has lost 25 dollars since striking an all-time high level of US$147.27 on July 11.

'Markets are finally working as they are supposed to, as higher prices inevitably act as a brake on demand,' said Mr John Kilduff, analyst at MF Global.

US gasoline consumption fell last week for the 14th week in a row, according to a report by credit card firm Mastercard published on Tuesday.

The report came amid the traditional peak US summer holiday driving season and confirmed government statistics published on Monday that showed falling gasoline consumption for the first five months of the year as drivers faced sky-high prices at the pump.

'With the end of the season now in sight - the period between late August and late September typically sees a pullback in oil prices - and the head of OPEC also, seemingly, attempting to talk prices lower in recent days, there would seem to be a possibility that energy prices could continue lower from here,' said Mr Simon Derrick, analyst at Bank of New York Mellon.

Crude oil prices above US$120 a barrel are 'abnormal' and could fall to around US$78 under the right circumstances, OPEC President Chakib Khelil said on Tuesday.

Crude prices have doubled over the past two years but fallen from record highs of around US$147 a barrel reached earlier this month.

'There's a balance in the market. I would say stocks are at a good level and there hasn't been any disruption in demand,' Mr Khelil said.

Oil prices earlier on Tuesday had climbed on Royal Dutch Shell's announcement that it was suspending some crude deliveries after militants sabotaged a pipeline in Nigeria.

The Anglo-Dutch giant warned it may not be able to meet some supply contracts at its major Bonny terminal before the end of September.

It declared a 'force majeure' - a legal clause allowing producers to miss contracted deliveries because of circumstances beyond their control - for the remainder of July, August and September.