Oil Suffers Big Decline On OPEC, Bernanke Comments

New York, NY (AHN) - The price of crude oil sold off roughly 5 percent on Tuesday, settling at $137.99 a barrel, sparked by reduced demand estimates from OPEC.

The commodity traded as low as $135.92, down more than $10 a barrel, after OPEC announced growth in global demand for 2008 should be roughly 1.20 percent, down from the original estimate of 1.28 percent. OPEC said that high oil prices are hurting demand.

Comments from Federal Chairman Ben Bernanke also helped spark a sell-off in the commodity. Bernanke said that the economy faces "numerous difficulties" and rising energy and food prices could lead to an inflationary environment.

Strong inflation could be detrimental to the U.S. economy as it struggles to stay out of recession. A downturn in the economy would mean a demand decrease in products across all categories, many of which are manufactured with oil-based materials. This would drop oil demand in places other than just the gas pump.

Elsewhere, the five-day oil worker strike in Brazil has had less impact on production than expected as output is only down 4 percent overall. Roughly 1.6 million barrels a day are produced on average.