May 28 (Bloomberg) -- Crude oil fell to a one-week low on concern record fuel prices will cut consumption at the height of the U.S. driving season.

U.S. gasoline pump prices reached an all-time high May 26, curbing demand from motorists at the start of the summer, when fuel use typically peaks. Soaring fuel costs coupled with a housing slump helped push U.S. consumer confidence to the lowest level since October 1992, a report showed yesterday.

``The high price of fuel is now finally affecting the man in the street,'' said Robert Laughlin, senior broker at MF Global Ltd. in London. ``Global economies are creaking at present, with U.S., German and French consumer confidence data all at record lows.''

Crude oil for July delivery dropped as much as $2.89 a barrel, or 2.2 percent, to $125.96 a barrel on the New York Mercantile Exchange. That's the lowest since May 19. Oil traded for $126.17 at of 1:18 p.m. London time, bringing the contract's losses to almost $6 in two days.

Oil's drop was part of a wider decline across commodities markets. Gold, platinum and silver all fell in London. Rice futures plunged for a third day to a two-month low.

Yesterday, oil fell more than $3 a barrel to close at $128.85, the biggest drop for a single trading session since April 29. Futures reached a record $135.09 on May 22 and have doubled in the past year.

``Consumer confidence is practically in mourning, which leads one to think we'll have a price correction for oil'' Benjamin Louvet, deputy managing director of PRIM'Alternative Investment, said in a television interview.

Brown Presses

The strain of high prices has prompted responses from the governments of consuming nations. U.K. Prime Minister Gordon Brown pressed oil company executives to raise output at a meeting in Scotland today and called for the issue to be discussed at the Group of Eight summit in Japan.

Asian oil importers including Indonesia, Sri Lanka and Taiwan have all decided to raise fuel prices as the cost of subsidies mounts.

One Indonesia, an oil-exporting nation that's become a net importer, today said it would leave the Organization of Petroleum Exporting Countries in acknowledgement of its changed status. Indonesia will sign today a decree to exit OPEC, Energy Minister Purnomo Yusgiantoro said in Jakarta today.

Brent crude oil for July settlement was at $126.40 a barrel, down $1.91, on London's ICE Futures Europe exchange at 1:18 p.m. London time. It declined $4.06, or 3.1 percent, to settle yesterday at $128.31 a barrel, the biggest decline since March 31. The contract touched a record $135.14 on May 22.

`Brave Analyst'

Analysts continued to increase their price forecasts even as oil dropped. Natixis Bleichroeder Inc., an international securities brokerage, yesterday raised its 2008 average price forecast for West Texas Intermediate crude oil, the grade traded in New York, by 64 percent to $114.46 a barrel.

``It'd be a brave analyst who said that the market has peaked,'' said Julian Lee, a senior energy analyst at the Centre for Global Energy Studies in London. ``Clearly, there are downward pressures on demand in the U.S. and Europe, but we don't see much evidence of a slowdown in Asia.''

Fuel usage in the U.S. averaged 20.3 million barrels a day in the four weeks ended May 16, down 1.3 percent from a year earlier, the Energy Department said last week.

The price of regular gasoline at U.S. pumps, averaged nationwide, rose 0.1 cent to an all-time high of $3.937 a gallon, AAA said yesterday on its Web site.

The Conference Board's confidence index declined more than forecast to 57.2, the lowest level since October 1992, from a revised 62.8 in April, the New York-based research group said.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

Last Updated: May 28, 2008 08:20 EDT