Oil prices tumbled Wednesday, weighed down by a drop on Wall Street, a stronger dollar and signs that China's energy needs might not be as robust as previously thought.
Gasoline prices also fell, sliding lower for the sixth straight day.
Tom Kloza, publisher and chief oil analyst at Oil Price Information Service said Americans still aren't driving enough to justify higher prices.
"We'll see larger pullbacks in the days and weeks ahead, I believe," Kloza said.
The national average fell by less than a penny overnight to $2.737 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is still 14.7 cents more expensive than it was last month and costs 89.4 cents more than the same time last year.
Benchmark crude for February delivery gave up $1.40 to settle at $77.62 a barrel on the last day of trading for the contract on the New York Mercantile Exchange. Most of the trading already moved to the March contract, which also fell $1.58 to settle at $77.74 a barrel.
Crude prices dropped early in the day, slumping after reports from China that the government was taking more steps to discourage risky bank lending.
China has become one of the biggest oil consumers in the world, and economists expected it would burn even more fuel this year. But a recent crackdown on bank lending has raised fears that China's economic recovery — and its appetite for oil — could falter.
In the U.S., the government is expected to report Thursday that the nation's supply of oil, gasoline and other fuels continues to grow as Americans continue to use less energy.
Meanwhile, equities markets dropped on concerns by banks that the U.S. economy remains fragile and will take a long time to recover. The dollar also strengthened relative to other major currencies, making crude barrels more expensive to buy for investors holding foreign money.
In other Nymex trading in February contracts, heating oil fell 2.43 cents to settle at $2.0211 a gallon, while gasoline dropped 1.26 cents to settle at $2.0465 a gallon. Natural gas futures lost 6.1 cents to settle at $5.496 per 1,000 cubic feet.
In London, Brent crude for March delivery shed $1.65 to $75.98 a barrel on the ICE Futures exchange.