Light, sweet crude for August delivery fell $5.31 to settle at $129.29 a barrel on the New York Mercantile Exchange. The last time oil settled below $130 was June 5, when it settled at $127.79.
The decrease may mean that the market has finally realized that the fundamentals cannot sustain such large prices, said Peter Beutel, an oil analyst with Cameron Hanover.
"I think the days of seeing record prices every other day for 60 days running are behind us," Beutel said. "But that doesn't mean we won't see a few more highs."
Beutel said that uncertainty over the economy, the Middle East and hurricane season mean oil prices will remain volatile in the short run.
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