LONDON: Oil prices fell more than $1 on Friday as flagging US demand and the stronger dollar extended crude s losses to 8 percent this week.
US crude traded down $1.31 to $106.58 a barrel by 1117 GMT after settling on Thursday at the lowest level since April 4. London Brent crude fell $1.30 to $105.00.
Slowing demand in the United States, due to high fuel costs and wider economic problems, has sent crude down from record highs over $147 a barrel in July, and overshadowed US government data released on Thursday showing an unexpected drop in crude stocks in the world s top consumer.
Continuing worries about the international economic outlook, a firmer US dollar, and, possibly, market speculation that OPEC may not move production levels following next week s OPEC meeting left oil prices softer, David Moore, commodity strategist from Commonwealth Bank of Australia, said in a note.
Most of the US Gulf of Mexico production shutdowns related to Hurricane Gustav are expected to be reflected in next week s inventory data.
Energy companies have been slowly bringing back shut-in oil and natural gas production and 11 refineries remained closed on Thursday following Gustav, but early inspections showed little damage to installations. Traders were eyeing more storms brewing in the Atlantic. Hurricane Ike weakened slightly, as it charged toward the Bahamas, and it was days away from approaching the United States.
Until July, surging oil demand in emerging economies like China had supported a six-year record rally, with additional strength coming from a rush of cash from investors seeking to hedge against inflation and the weak dollar.
Gains in the greenback over the past two months, hitting a 10-month high against the euro on Thursday, have helped push oil down.
No. 2 oil consumer China will slash gasoline and diesel imports to nearly nil this month, ending months of record-high purchases that filled domestic stocks just ahead of the Olympics, trade sources said.
Traders were also awaiting OPEC s next meeting on Sept. 9, with some expectations it may opt to cut oil production to prevent a build-up of surplus stocks that could deepen the slump in prices, which have fallen sharply from the July record high.
Iran s OPEC governor said an oil price of $100 per barrel was appropriate in current conditions, the Oil Ministry s news agency Shana reported on Friday.
