Oil prices fell in Asian trading as fears about slowing US demand outweighed the increasing likelihood of heightened tensions over Iran's controversial nuclear programme, dealers said.
In morning trade, New York's main contract, light sweet crude for September delivery fell 1.14 dollars to 120.27 dollars a barrel from 121.41 dollars at the close of floor trading in the US.
London's Brent North Sea crude for September delivery dropped 1.13 dollars to 119.55 dollars.
Oil prices fell below 120 dollars in New York and London Monday.
Tropical Storm Edouard, expected to make landfall Tuesday, will likely only provide limited boost to prices as investors are more concerned with American oil demand, analysts said.
'US demand won't recover soon. Tropical Storm Edouard should bring a short term support, but demand outlook weighs on prices,' commodity analysts from Societe Generale (Paris: FR0000130809 - news) said in a report.
Phil Flynn, an analyst from Alaron Trading, agreed demand concerns were the biggest factor dragging down market sentiment.
'Slowing demand and the hope for more supply is weighing on the market even as the geopolitics and the weather is getting wild,' Flynn said.
Tensions over Iran's nuclear programme surged after it missed a deadline over the weekend to respond to an international package of incentives aimed at persuading Tehran to freeze uranium enrichment.
The US State Department said it and the five other powers holding nuclear talks with Iran had threatened to pursue new punitive action against Tehran.
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