* Oil falls on rising dollar
* U.S. lawmakers aiming to vote on Monday on bailout
* Iran avoids new sanctions in UN council vote (Adds
details, analyst's comments)
By Fayen Wong
PERTH, Sept 29 (Reuters) - Oil extended its decline and
fell towards $106 a barrel on Monday, pressured by gains in the
U.S. dollar amid optimism that a vote on a $700 billion bailout
to rescue the U.S. financial system is near.
Congressional leaders from both parties said they had
reached a tentative agreement on Sunday, but questions abound
as to whether the rescue plan, which would use taxpayer funds
to buy up toxic mortgage debt, would restore confidence to
shaky markets and head off a deep recession.
U.S. light crude for November delivery <CLc1> fell 50 cents
to $106.39 a barrel by 0027 GMT, narrowing earlier losses of as
much as 99 cents. The contract settled down $1.13 at $106.89 on
Friday.
"Oil is down because of the U.S. dollar. I think the
markets are also cautious about the bank bailout and there is
some sense that the risky package could be bearish for oil
demand," said Mark Pervan, a senior resource analyst at the
Australia & New Zealand Bank (ANZ), based in Melbourne.
U.S. lawmakers were gearing up to vote on Monday on
creating a $700 billion government fund to buy bad debt and to
help ease the financial crisis, while two troubled European
banks looked set for nationalisation. []
The U.S. dollar rose against the euro and the yen on
Monday, and hopes a bailout bill would soon be passed also
spurred a rally in the U.S. stock index futures.
Oil prices have risen about 11 percent since the start of
the year on geopolitical tensions in the Middle East, supply
disruptions in Nigeria and a falling U.S. dollar. But they are
down 28 percent from record highs above $147 a barrel struck in
July as the economic crisis and high fuel costs hurt demand in
the United States and other developed economies.
Further pressure has come as investors, who flocked into
oil and other commodities earlier this year as a hedge against
inflation and the weak dollar, shift into safer havens.
News that Iran, the world's fourth-largest exporter of oil,
has avoided new sanctions in a United Nations vote over the
weekend also kept prices in check.
The U.N Security Council unanimously passed a resolution on
Saturday that again orders Iran to halt its nuclear enrichment
work but imposes none of the new sanctions Washington and its
allies wanted [].
But analysts said a slow recovery in oil and gas production
in the U.S. Gulf of Mexico, home to a quarter of U.S. output,
would offer some support for prices in the short term.
Some 57.4 percent of oil production and 52.8 percent of
natural gas output in the Gulf of Mexico remained shut as of
Sept. 25, the Minerals Management Service said on Friday.
[]
Shell Oil <RDSa.L>, the largest producer in the Gulf of
Mexico, expects the bulk of its offshore fields back on line
within two weeks [].
Separately, the Organisation of the Petroleum Exporting
Countries (OPEC) has no further plans to alter production
levels as oil prices remain outside of control of fundamental
factors like supply and demand, Venezuelan Oil Minister Rafael
Ramirez said on Saturday []
(Reporting by Fayen Wong; Editing by Alex Richardson)
