NEW YORK — Oil prices plunged in a massive selloff today, falling below $120 a barrel for the first time since early May after Tropical Storm Edouard appeared unlikely to threaten oil and natural gas facilities in the Gulf of Mexico.

Also weighing on prices was a report by the Commerce Department that consumer spending fell in June as shoppers dealt with higher prices for gasoline, food and other items. That fed investors' beliefs that a U.S. economic slowdown is forcing Americans to cut back on energy use.

Light, sweet crude for September delivery fell more than $5 at one point to $119.50 a barrel on the New York Mercantile Exchange, it's lowest level since May 6. The contract later recovered slightly, trading $4.25 lower at $120.85 a barrel.

Natural gas futures also sank, dropping 68.1 cents, or 7.25 percent, to $8.708 per 1,000 cubic feet.

The dramatic dive came shortly after traders learned that Edouard, aiming for the coasts of Texas and Louisiana, likely would not damage offshore oil and natural gas drilling platforms that sit in the storm's path.

"That has taken a lot of pressure off the market. It looks like the is thinking that we dodged another bullet," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.

Meanwhile, retail gas prices kept falling, reflecting the continuing price-driven drop in U.S. fuel demand. A gallon of regular gas fell on average about half a penny overnight to $3.881.

Gas has fallen 5.6 percent since hitting an-all time high above $4 a gallon on July 17, but hasn't kept up with oil's steep decent.

Crude has now fallen in six of the last nine sessions and has shaved 18 percent off its trading record of $147.27 reached July 11.