It might be a good idea to replace your O2 sensor anyways, as 60,000 miles seems to be its useful life.
But in my experience and those of others I've talked to, a bad O2 sensor will result in huge drops in mpg, like down to 10 mpg. A drop from 21.5 to 16.8 to me doesn't seem like a big enough drop, but who knows?
It may be the gasoline, it may be harder driving...
2001 E430, Bourdeaux Red, Oyster interior.
1973 280SE 4.5, 170,000 miles. 568 Signal Red, Black MB Tex. "The Red Baron".