Crude prices plunged almost 7 U.S. dollars a barrel Tuesday, the biggest daily drop since 1991, due to fears that U.S. economic woes could hurt global oil demand.

Light, sweet crude for August delivery declined 6.44, or 4.4 percent, to settle at 138.74 a barrel on the New York Mercantile Exchange after hitting 135.92 dollars earlier. In London, August Brent crude fell 5.17 dollars to settle at 138.75 dollars a barrel on the ICE Futures exchange.

A station attendant fills up a car at a gas station in Valparaiso city, about 75 miles (120km) northwest of Santiago, July 2, 2008. Crude prices plunged almost 7 U.S. dollars a barrel Tuesday, the biggest daily drop since 1991, due to fears that U.S. economic woes could hurt global oil demand. (Xinhua/Reuters Photo)

Biggest daily decline

In the morning, oil climbed to a record 147 dollars per barrel on the sentiment that the record decline in the value of the euro would prompt investors to buy crude, said Wall Street Strategies' senior research analyst Conley Turner. However, that trade quickly rolled over as the price of the commodity fell dramatically.

Federal Reserve Chairman Ben Bernanke, who testified before the Senate Banking Committee Tuesday, said the fragile economy is facing "numerous difficulties" despite the Fed's aggressive interest rate reductions and other fortifying steps.

At the same time, Bernanke also sounded another warning that rising prices for energy and food are elevating inflation risks.

Concerns about the economic woes of the United States, the world's biggest oil consumer, helped spark the heavy sell-off.