NEW YORK -- Oil prices kept falling Friday, heading for their biggest monthly drop since futures trading began 25 years ago on signs that a contracting U.S. economy will suppress energy demand well into 2009, according to The Associated Press.

Oil's monumental collapse - prices are down 36 percent for the month and 56 percent from their July record - has stunned oil-producing countries while giving cash-strapped U.S. consumers a rare dose of relief. Pump prices have fallen by half since their summer peak above $4 a gallon - a huge drop that's expected to result in over $100 billion in annual savings for American households.

"That's a pretty powerful stimulus to consumers," said Adam Sieminski, chief energy economist at Deutsche Bank Global Markets in Washington.

Friday's oil decline was tied to a significantly stronger U.S. dollar. Oil market traders often buy oil as a hedge against inflation when the dollar falls and sell those investors when the greenback rises. The dollar has rallied in recent weeks as the financial crisis begins hurting economics in Europe and elsewhere, prompting investors to shift funds into the greenback as a safe-haven.

Light, sweet crude for December delivery fell $1.35 to $64.61 a barrel on the New York Mercantile Exchange, after earlier falling as low as $63.12.