Oil tumbled Thursday August 18, 2011 on worries that pinched consumers will drive less and cut spending on gasoline.

Gasoline, which is made from crude oil, should follow oil downward in coming weeks.

The national average held steady on Thursday at $3.585 per gallon. If oil stays at current levels, gasoline should fall as low as $3.25 between mid-September and mid-October, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service.

Gasoline prices won't fall simply because of cheaper oil. In the fall refineries begin making winter fuel blends that contain less expensive additives than summer gasoline. Motorists also tend to drive less as the summer vacation season draws to a close.

"All of that adds up to weaker prices in September," Kloza said.

Even if it falls to $3.25 per gallon, gasoline will still be about 50 cents more expensive than in the same period last year.

Benchmark West Texas Intermediate crude for September delivery fell $3.92, or 4.5 percent, to $83.66 per barrel on the New York Mercantile Exchange. Brent crude, which is used to price many international oil varieties, dropped $3.06 to $107.54 per barrel on the ICE Futures exchange in London.

Oil markets that earlier this year seemed to be headed only higher have since been rattled by concerns that another recession may be approaching.

"People are getting spooked," oil trader Stephen Schork said.

Prices have swung wildly with every new report about where the economy is headed. Thursday brought a slew of data on unemployment, consumer prices, housing and economic growth that suggested consumers are being squeezed. The federal government released reports showing that the number of people applying for unemployment benefits rose last week while consumer prices increased last month.

Meanwhile, the National Association of Realtors said people bought fewer previously occupied homes in July. And a private research group forecast sluggish growth for the rest of the year. The Conference Board's index of leading indicators suggested the economy won't pick up enough this year to improve the jobless rate.

Together the reports point to stagnant growth for the U.S., the world's largest petroleum consumer. Traders who snapped up oil contracts earlier this week on a rosier outlook for the economy were forced to sell.

The dollar also rose as the euro and other currencies fell on worries about the health of European banks and the broader regional economy. A stronger dollar pushes down oil prices because oil is priced in dollars and becomes less attractive to investors with foreign currency as the dollar rises.

In other Nymex trading for September contracts, heating oil lost 8 cents, or 2.6 percent, to $2.8862 per gallon and gasoline futures dropped 9 cents, or 3 percent, to $2.7823 per gallon. Natural gas lost 6 cents at $3.875 per 1,000 cubic feet.