Oil prices tumbled more than $3 a barrel yesterday as tropical storm Dolly grew increasingly unlikely to threaten supply, giving traders one less reason to buy as a strengthening U.S. dollar helped keep prices in check.

The selloff was a throwback to last week's sharp declines, and dragged crude to its lowest level since early June. It was oil's fifth decline in the last six sessions.

Light, sweet crude for August delivery fell $3.39 to settle at $128.42 a barrel in its last trading day on the New York Mercantile Exchange. Earlier in the day the contract, which will be replaced by September crude today, dropped as low as $125.63.

The drop offered further evidence that investors who only a week-and-a-half ago drove prices to a new high above $147 a barrel, are now quickly pulling money out of the market. It was also a reminder that, with traders for the moment turning cautious, the absence of major news can push the market down -- just as incremental supply concerns previously drove prices sharply higher.