Baku, July 14 (AZERTAC). Oil fell in New York, snapping two days of gains, after the U.S.`s credit rating was put under review for a downgrade, stoking speculation an economic slowdown may temper fuel demand in the world`s biggest crude consumer, Bloomberg reports.

Futures dropped as much as 0.5 percent after Moody`s Investors Service said yesterday it would reconsider the nation`s Aaa rating for the first time since 1995. Oil also slid after a U.S. Energy Department report yesterday showed gasoline demand fell 3.2 percent in the week ended July 8, when consumption typically rises during the peak driving season.

“It`s a worry, this downgrade,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “That`s a scary thing, the uncertainty this is creating in the market. It`s not a strong situation for the U.S. because demand is stagnating.”

Crude for August delivery fell as much as 51 cents to $97.54 a barrel in electronic trading on the New York Mercantile Exchange. It was at $97.72 at 1:28 p.m. Singapore time. The contract yesterday rose 62 cents to $98.05, the highest close since July 7. Prices are 27 percent higher the past year.

Brent oil for August settlement was at $118.40 a barrel, down 38 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract traded at a premium of $20.68 a barrel to U.S. futures, compared with a record close of $22.29 on June 15.

The U.S., rated Aaa since 1917, was put on review on concern the debt limit won`t be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low, Moody`s said yesterday. The rating would likely be reduced to the Aa range and there is no assurance that Moody`s would return its top rating even if a default is quickly cured.

The country`s gasoline demand slumped 293,000 barrels last week to 9.02 million barrels a day, the Energy Department said. That`s the lowest since the week of May 6. Overall U.S. oil consumption averaged 18.9 million barrels daily in the period to July 8, down 1.4 percent from the same time a year ago.

U.S. crude stockpiles declined 3.1 million barrels last week to 355.5 million, the Energy Department report showed. They were projected to drop 1.5 million barrels, according to a Bloomberg News survey. The industry-funded American Petroleum Institute said in a separate report on July 12 that inventories rose 2.34 million barrels.

Gasoline supplies fell 840,000 barrels to 211.7 million last week, the report showed. A 500,000-barrel gain was projected, according to the survey. Distillate inventories, a category which includes heating oil and diesel, rose 2.97 million barrels to 145 million, compared with a median forecast for a 500,000-barrel increase.

“Traders saw this week`s DOE report as a bullish report,” Peter Beutel, president of Cameron Hanover Inc., an energy adviser in New Canaan, Connecticut, said in an e-mailed note today. “These headline figures combined with a decline in refinery utilization to bring buyers into the market.”

Refinery utilization fell to 88 percent last week from 88.4 percent, the Energy Department report showed.

Federal Reserve Chairman Ben S. Bernanke signaled the central bank has more tools for monetary easing should the economy weaken and stymie efforts to generate jobs for 14.1 million unemployed Americans.

The Fed could pledge to keep the main interest rate at a record low and hold its balance sheet at $2.87 trillion for a longer period, Bernanke said yesterday in congressional testimony. It could also buy more bonds, increase the average maturity of its securities holdings or cut the interest rate it pays banks on their reserves, he said.

“If the Fed has the power to do this on its own, people would come back into the oil market and buy it up,” said Mitsubishi`s Nunan.

Investors tend to buy dollar-denominated commodities when the currency weakens.