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NEW YORK (CNNMoney.com) -- Oil prices retreated Thursday, reversing earlier gains, on worries that a weakening U.S. economy could cripple demand.

U.S. crude for September delivery fell 99 cents to settle at $115.01 a barrel on the New York Mercantile Exchange.

Oil fluctuated wildly in the day, spiking as high as $117.42 earlier in the session, then falling as low as $112.59 before rebounding some. Oil rose nearly $3 Wednesday.

Demand concerns: Concern about slowing demand weighed on oil after two reports pointed to further economic weakness in the United States, the world's largest oil consumer.

A report from the Labor Department showed that consumer price inflation jumped to 5.6% in July. A second report showed that jobless claims fell last week, but were still well above economists' forecasts.

"I think the numbers that came out today suggest that demand weakness in the U.S. could continue," said Brendan Fogerty, commodities research analyst with Lehman Brothers.

A weaker U.S. economy affects not only demand from drivers, but it can also weigh on commercial fuel use if consumers buy fewer goods.

"If Japan makes a TV and they've got to get it to consumers in Chicago, they've got to put it on a boat, that takes oil, they've got to put it on a truck. If the U.S. consumer isn't consuming then that demand dries up," said Brad Samples, commodities analyst with Summit Energy in Kentucky.

Concerns that high fuel prices and a weaker economy are hurting demand have sent crude prices sharply lower in recent weeks.

Oil has been trending lower since the end of July and is down about $33, or 21%, from its all-time high of $147.27.

Dollar: Investors also mulled a stronger dollar, which usually gives investors a reason to pull money out of oil.

The dollar has been steadily gaining strength amid worries about slowing economic growth outside of the United States, particularly in Europe.

Eurostat, the European Union's statistics bureau, said Thursday that the gross domestic product of the 15-nation euro zone had fallen 0.2% last month.

Earlier this week, Japan also reported that its GDP shrank under pressure from high oil prices and a slowing global economy.

Oil is traded in dollars, so when the dollar strengthens, crude oil becomes relatively more expensive for foreign investors. Oil and other commodities are also commonly used as a hedge against inflation.

Georgian conflict: Concerns about possible supply disruption in Eastern Europe cooled as after a senior U.S. General told the Pentagon that Russian troops appeared to be complying with a cease-fire agreement to leave a strategically important city in the country of Georgia.

Georgia serves as an important hub for transporting oil and natural gas between Europe and Asia.

The conflict, which began over the weekend, contributed to Wednesday's rise in crude prices, although the oil market has largely ignored threats to international supplies over the past few weeks as investors have been more concerned about demand.

Gasoline: The average price of retail gas in the U.S. has fallen more than 8%, to $3.778 a gallon at the pump over the past 28 days, according to motorist group AAA. However, prices remain more than a dollar higher than where they were 12 months ago.

A report released Wednesday from the Transportation Department showed that U.S. drivers cut back on driving by 4.7% in June, however that was before gasoline prices began falling.