-- Crude oil fell for a third day in New York, trading near $118 a barrel on concern slowing economic growth in the U.S. and Europe will curb fuel consumption.

Oil dropped to its lowest level since early May as the services industries in the U.S. and Europe shrank for a second straight month in July. China's economy grew at the slowest pace since 2005 in the second quarter and manufacturing in July contracted for the first time since a survey began in 2005.

``There's concern about fading demand because of economic slowdowns in the U.S., Europe and now, even China,'' said Tobias Merath, a commodity analyst at Credit Suisse Group in Singapore. ``It's a correction, not a collapse, and we are halfway there,'' said Merath, who forecast oil will fall to $110 a barrel by the end of September.

Crude oil for September delivery fell as much as $1.07, or 0.9 percent, to $118.10 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $118.33 at 12:17 p.m. Singapore time. Yesterday, oil fell $2.24, or 1.8 percent, to settle at $119.17 a barrel in New York. Earlier, it touched $118, the lowest since May 5.

Oil has lost more than $28 since touching a record $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. On Aug. 3, the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials fell 3.5 percent, its biggest loss since March.

Oil has also fallen as its appeal as an inflation hedge has been curbed by gains in the dollar against the euro and yen. The dollar traded near a seven-week high against the euro, and was near its highest versus the yen in more than a month. U.S. Federal Reserve policy makers left interest rates unchanged yesterday amid weak economic growth.

`Fading Away'

``Monetary conditions are also fading away,'' reducing oil's appeal to investors, Credit Suisse's Merath said.

U.S. gasoline demand fell for a 15th consecutive week, as motorists cope with high fuel prices by driving less, according to a MasterCard Inc. report yesterday. Demand last week dropped 3.4 percent from a year earlier, MasterCard, the second-biggest credit-card company, said in its weekly SpendingPulse report.

Nymex gasoline for September delivery fell as much as 1.89 cents, or 0.6 percent, to $2.9375 a gallon. Yesterday it lost 4.38 cents, or 1.5 percent, to $2.9564 a gallon, the lowest close since May 1. Futures fell 13 percent last month, the biggest drop since September 2006, as a slowing economy cut demand for the fuel.

Gasoline Prices

Regular gasoline at the pump, averaged nationwide, fell 1 cent to $3.871 a gallon, AAA, the nation's largest motorist organization, said yesterday on its Web site. Pump prices reached a record $4.114 a gallon on July 17.

``Blame the deteriorating U.S. economy and its weak demand,'' said Victor Shum, a senior principal at Purvin & Gertz Inc. in Singapore. ``Supply concerns are being ignored now.''

Tropical storm Edouard was downgraded to a depression after it made landfall on the Texas coast, idling 6 percent of U.S. Gulf of Mexico oil output. Edouard's wind speeds remained below hurricane strength when it struck the Texas coast, according to the National Hurricane Center.

The U.S. Energy department may say gasoline supplies fell 1.5 million barrels last week in its weekly report today, a Bloomberg survey predicted.

Brent crude for September settlement dropped as much as 80 cents, or 0.7 percent, to $116.90 a barrel on London's ICE Futures Europe exchange today, and traded at $116.93 a barrel at 12:11 a.m. Singapore time.

OPEC boosted output by 0.7 percent in July to 32.825 million barrels a day, a Bloomberg News survey showed yesterday. The gains were led by Nigeria, which had its highest production figure since March, and Saudi Arabia. The kingdom's output reached a three-year high.

``The Saudis are delivering what they promised after they said in June they would increase production,'' Credit Suisse's Merath said.