LONDON (ShareCast) - Crude oil prices fell over $2.50 to around $121 a barrel after OPEC President Chakib Khelil said prices are abnormally high.

Ongoing concern about slowing demand also took a chunk out of oil’s value. Crude for September delivery fell by $2.54 to finish at $122.19 a barrel, a three-month low, on the New York Mercantile Exchange. Earlier in the session the contract hit a low of $120.75.

Chakib Khelil also told reporters that prices could retreat back to $80 a barrel over the long term, a price seen just last year, if the dollar recovers and concern about supplies from the Middle East and Nigeria ease.

Crude futures have dropped by double digits in the last fortnight, as fears that surging prices are ultimately stifling demand.

Among precious metals gold for August delivery slid $11.20 to settle at $916.50 an ounce on the New York Mercantile Exchange, it lowest level in more than a month.

A stronger dollar and a $2.50 slide in oil prices hammered demand for the yellow metal and precious metals across the board.

Better than expected consumer confidence data from the US also prompted a rotation out of commodities into equities and the dollar.

September silver futures fell 9 cents to close at $17.375 an ounce, while October platinum lost $31.30 to settle at $1,745.40 an ounce.

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