Crude has lost nearly $16, or 11%, in the last three days. Meanwhile, natural-gas futures tumbled 7.6% Wednesday after government data showed U.S. inventories gained more than expected.

After rising $2.15 to an intraday high of $136.75 in early morning trading, crude for August delivery slumped $5.31, or 3.9%, to end at $129.29 a barrel on the New York Mercantile Exchange, the lowest since June 5.

"We have gasoline demand coming down, and that's putting pressure on the market," said Darin Newsom, senior analyst at DTN, a commodities information provider. "Bullish demand news just simply isn't there."

The Energy Information Administration reported Wednesday that over the past four weeks, U.S. motor gasoline demand has averaged 9.3 million barrels per day, down by 2.1% from the same period last year.

The EIA also said U.S. crude inventories rose 3 million barrels in the week ended July 11. Analysts surveyed by energy-information provider Platts were expecting a drop of 3 million barrels.

Crude's loss led broad declines in most commodities. The Reuters/Jefferies CRB Index (CRB: CRB 432.60, -11.97, -2.7%) , a benchmark gauging the prices of major commodities, fell 2.7% to 432.54.

August reformulated gasoline fell 3.5% to $3.16 a gallon and August heating oil lost 2.5% to $3.74 a gallon. Corn futures tumbled nearly 4% to the lowest in more than a month. Soybeans also fell. See Food Futures.

Bucking the trend, gold futures ended higher. See Metals Stocks.

Crude was rising earlier as a weakening dollar pushed up dollar-denominated crude prices and a production suspension in Nigeria raised supply concerns.

The U.S. dollar changed course in afternoon trading, adding downward pressure to crude. The dollar index (DXY: DXY 72.07, -0.17, -0.2%) , which measures the buck against a trade-weighted basket of currencies, was up 0.2% at 72.20. See Currencies.

Eni SPA, Italy's biggest oil company, said it has suspended production of 47,000 barrels a day in Nigeria due to "a sudden drop of pressure" on pipelines. The causes of the incident were still unknown, Eni said. Shares of Eni (E: E 68.70, +0.28, +0.4%) fell 0.7% in New York.

Nigeria, a member of the Organization of Petroleum Exporting Countries, is the world's eighth-biggest oil exporter. It's also the fifth-largest foreign crude supplier to the U.S.

In other international news, the U.S. is reportedly considering establishing an embassy in Iran in the next month, according media reports. It would be the U.S.'s first diplomatic presence in Iran in 30 years. Signs of increasing stability in the recently troubled oil-producing nation could potentially underpin crude prices.

U.S. natural-gas inventories rose 104 billion cubic feet in the week ended July 14, the EIA reported Thursday. Analysts at Global Insight had been expecting a buildup of 86 billion cubic feet.

After the data, natural-gas futures for August delivery tumbled 86.1 cents, or 7.6%, to close at $10.54 per million British thermal units. Earlier, it fell to an intraday low of $10.46, down 8.2%.

At 2,312 billion cubic feet, natural-gas stocks were 361 billion cubic feet less than last year at this time and 49 billion cubic feet below the five-year average of 2,361 billion cubic feet, the EIA said.