LONDON (AFP) - Oil prices fell heavily on Tuesday, erasing earlier gains, as traders feared that slower economic growth in the United States could dampen future demand. New York's main oil contract, light sweet crude for August delivery, dropped 1.38 dollars to 143.80 dollars a barrel. London's Brent North Sea oil for August declined 1.55 dollars to 142.37 dollars. Both oil contracts had hit record highs last Friday, 147.27 dollars in New York and 147.50 dollars in London. Prices fell on Tuesday after US Federal Reserve chairman Ben Bernanke said the US economy was growing a bit faster than expected and could avoid recession but also cited a "critical" need to keep inflation expectations in check. Earlier on Tuesday, prices had jumped towards recent record peaks as traders reacted to the dollar striking a record low point against the European single currency. "Oil prices were higher (earlier on Tuesday), with the dollar resuming its decline against major currencies on downbeat sentiment over US financial markets after the US government's reassurance to rescue Freddie Mac and Fannie Mae failed to boost investor confidence," said Sucden analyst Andrey Kryuchenkov. In the foreign exchange market, the euro hit a record 1.6038 dollars on mounting investor fears about the stormy US economic outlook, dealers said. World equity markets also fell heavily on scepticism that a dramatic weekend US government rescue of the two mortgage giants would contain the ongoing crisis in American finance, analysts said. The weakening US currency stimulates demand for dollar-denominated raw materials like oil, which become cheaper for foreign buyers. The market found some support from ongoing jitters about crude output from key producers Iran and Nigeria. A five-day strike by oil workers in Brazil against state-run Petrobras meanwhile exacerbated supply concerns, traders said. The price of oil has more than doubled over the past 12 months to strike record levels, driven by persistent fears about tightening global energy supplies and strong demand. However on Tuesday, the oil producers' cartel OPEC revised down its forecast for world demand growth this year to 1.20 percent from 1.28 percent, citing the economic slowdown and the effect of high fuel prices. "The new price structure and slower world economy have helped dampen oil demand growth in many regions," OPEC said in its monthly report. The Organization of Petroleum Exporting Countries (OPEC) estimated that world oil demand would rise to 86.81 million barrels per day (bpd) in 2008, up from 85.78 million bpd in 2007.