The prices of crude oil traded on the New York Mercantile Exchange slid more than 3 percent, bringing losses since Friday to 5.8 percent.

The dramatic fall comes as Goldman Sachs predicts Brent prices would fall back to 105 US dollars in "coming months," down from $120 on Tuesday. The International Energy Agency has also warned high prices can be eroding demand.

Oil prices are suffering another sharp pullback, on worries the high price of crude is already cutting into demand.

Sources say Saudi Arabia, the world's top oil exporter, has cut production by about 500,000 barrels a day, to compensate for the drop in energy use.

And that production cut comes as the International Energy Agency warns surging energy prices will hurt the global economic recovery, which will lead to lower energy consumption.

Goldman Sachs, a long time commodities bull, told clients for a second day that now is the time to pocket gains made in the sector.

Some analysts agree. They say oil prices have rallied too far in the short-term, but in the long-term oil and other commodities, are still a buy.

Michael Hewson is a market analyst at CMC.

Michael Hewson, CMC Market Analyst, said, "There are so many different factors driving commodity prices higher. There's uncertainty about the U.S. fiscal policy going forward, you have rising inflation, you've also obviously got supply concerns in respect to agricultural commodities and soft commodities. And you've also got unrest in the Middle East, which I don't think is going to go away anytime soon."

That's why, even after a two-day slump, few analysts expect oil to go back below $100 a barrel.