Oil fell in price by $US5 a barrel on Tuesday. It is now at a six-week low.
A tropical storm in the Gulf of Mexico earlier pushed prices up, but Tropical Storm Dolly is now expected to miss major oil and gas installations.
Prices fell last week by $US17 a barrel as dealers focused on mounting US economic troubles and sliding demand.
US crude futures fell $US5.03 to $US126.01 a barrel by 1520 GMT on Tuesday. London Brent was off $US4.50 at $US128.11.
Oil prices have fallen more than 14% over the past 10 days since reaching more than $US147 on 11 July.
Simon Wardell of Global Insight in London said it was still not clear whether the price slide had finished.
The next set of government data on US oil inventories is due on Wednesday. Crude stocks unexpectedly rose last week by 3 million barrels, helping to drive oil prices lower.