Updated from 11:48 a.m.
Crude oil prices closed lower Tuesday after hitting record highs in the previous four sessions.
The benchmark U.S. crude fell $1.13, or 2.8%, to settle at $40.42 a barrel on the New York Mercantile Exchange, having flirted with $42 Monday, following an explosion that killed the head of Iraq's governing council.
Gasoline futures also lost ground Tuesday, dropping almost 4 cents a gallon, or 2.7%, to $1.38, after setting a new high yesterday.
The latest leg in the energy rally came after the Iraqi official, Izzedine Salim, was killed in a car-bomb attack in Baghdad.
U.S. oil prices last week, closed above $41 a barrel for the first time ever on the New York Mercantile Exchange, surpassing the previous record high set in October 1990 when Iraq occupied Kuwait. Prices have surged in recent weeks on worries about supply following attacks on oil-producing facilities in the Middle East and an increase in seasonal gasoline demand as the peak summer driving period approaches.
The key Organization of Petroleum Exporting Countries producer, Saudi Arabia, has called on its fellow cartel members to increase production about 6% to help prevent any negative impact on world economic growth, but oil traders have shrugged off any possible impact because oil producers are already pumping more than their official quotas.
OPEC meets with representatives of oil-consuming nations later this week in Amsterdam. Industry observers have said the meeting is a largely Saudi-backed initiative.