Oil fell again yes­ter­day af­ter dis­ap­point­ing re­ports on fac­to­ry pro­duc­tion and new home con­struc­tion raised more con­cerns about the eco­nom­ic re­cov­ery and fu­ture de­mand.The dol­lar rose against oth­er cur­ren­cies as well, push­ing down crude.Bench­mark crude for June de­liv­ery lost 89 cents at US$96.46 per bar­rel in af­ter­noon trad­ing on the New York Mer­can­tile Ex­change.The price of oil has dropped about 14 per cent from a high of US$113.52 on May 2.The Fed­er­al Re­serve said fac­to­ry pro­duc­tion fell 0.4 per cent in April, its first de­cline in ten months. A key rea­son was a drop in au­to man­u­fac­tur­ing af­ter the Japan earth­quake and tsuna­mi led to a parts short­age. Over­all, in­dus­tri­al pro­duc­tion has risen near­ly 11.5 per cent since hit­ting a re­ces­sion-low in June 2009 but is still be­low its pre-re­ces­sion peak in Sep­tem­ber 2007.

Mean­while the Com­merce De­part­ment re­port­ed that new home con­struc­tion fell 10.6 per cent last month from March. Much of the de­cline oc­curred be­cause apart­ment and con­do­mini­um con­struc­tion plum­met­ed. The sea­son­al­ly ad­just­ed rate fell to 523,000 homes per year, which is less than half the 1.2 mil­lion homes per year that econ­o­mists con­sid­er a sign of a healthy mar­ket.

Oil al­so lost ground yes­ter­day as the dol­lar strength­ened against oth­er cur­ren­cies. The dol­lar got a boost from Eu­rope's debt woes, par­tic­u­lar­ly wor­ries that more will have to be done to res­cue the Greek econ­o­my. Since com­modi­ties like oil are priced in dol­lars, a weak­er dol­lar makes them more of a bar­gain for buy­ers who use for­eign cur­ren­cies, so the price falls.

In­vestors al­so are con­cerned about Chi­na's ef­forts to slow its econ­o­my and keep in­fla­tion un­der con­trol. Chi­na is the world's sec­ond biggest oil con­sumer be­hind the US, and traders are con­cerned about di­min­ish­ing de­mand."The ra­tio­nale for jus­ti­fy­ing US$100 oil is tak­ing on wa­ter," oil an­a­lyst Stephen Schork said.

The good news for mo­torists is that low­er oil prices are trans­lat­ing in­to low­er prices at the pump. The na­tion­al av­er­age for reg­u­lar gaso­line was US$3.944 a gal­lon yes­ter­day. That's about 4 cents less than on Fri­day but 11.7 cents more than a month ago, ac­cord­ing to AAA, Wright Ex­press and the Oil Price In­for­ma­tion Ser­vice.