* Oil falls 50 cts to near $109, demand worries weigh
* Gustav moves off radar, traders eye storms Hanna, Ike
* US stock data Thurs seen showing crude build, gasoline
draw
By Chua Baizhen
SINGAPORE, Sept 3 (Reuters) - Oil dipped half a dollar to
near $109 on Wednesday, deepening this week's sharp drop as
traders looked past Hurricane Gustav to focus on a wobbly
global economy and the gloomy outlook for energy demand.
Oil has tumbled more than $6 since Friday, touching its
lowest in five months after early signs that a weakened Gustav
caused little damage to U.S. oil installations.
On Wednesday, U.S. crude <CLc1> fell 52 cents to $109.19 a
barrel by 0215 GMT after settling on Tuesday at $110.15, below
its 200-day moving average for the first time since May 2007.
Technical traders say the break of that key support level
could contribute to a deeper decline, extending oil's nearly
$40 a barrel slump since its July 11 record high of $147.27.
London Brent crude <LCOc1> slid 53 cents to $107.81.
Although it may be days before energy companies are able to
fully assess and restore the one-third of U.S. refining
capacity and one-quarter of oil output that was shut as a
precaution, many oil traders had already turned their attention
elsewhere.
"It's the economy, economy, economy. Everyone's worried
about demand destruction," said Robert Nunan, a risk management
executive at Tokyo-based Mitsubishi Corp.
"The market is bearish short- to medium-term, although it has
been supported by other factors such as the hurricane and the
situation in Russia and Georgia," he said.
Signs of slowing oil consumption in major developed
economies has undermined the fundamental argument that booming
Asian giants like China and India are straining oil supplies,
while a rebound in the U.S. dollar over recent months has
prompted many funds to unwind their
short-dollar/short-commodities trades.
The risk that Gustav could be a repeat of 2005's Hurricanes
Katrina or Rita, which wrecked over 100 offshore oil platforms
and shut several major refineries for months for repairs,
helped stem oil's decline last week, but support has since
evaporated.
With early inspections turning up little to no damage to
the facilities, the International Energy Agency, which had been
prepared to release emergency oil stocks in the event Gustav
caused severe damage, said it saw no need for emergency
supplies.
The U.S. Government said on Tuesday it would grant Citgo
Petroleum Corp's request for 250,000 barrels of crude oil from
the Strategic Petroleum Reserve. It is the only company so far
to ask for emergency supplies. []
Meanwhile some traders are casting a nervous eye on
Tropical Storm Hanna, which may possibly strike the U.S. East
Coast, while Hurricane Ike continued westward across the
Atlantic and was projected to be in the vicinity of the Bahamas
by Sunday.
Attention will turn on Thursday to U.S. oil inventory data
expected to show a 100,000 barrel increase in crude oil stocks,
a 1.3 million barrel drawdown in gasoline supplies and a
500,000 barrel build in distillates in the week to Aug. 29.
[]
But the data, released a day later than usual due to
Monday's public holiday, will not capture most of the supply
disruptions caused by Gustav, analysts said.
(Reporting by Chua Baizhen, Editing by Jonathan Leff)
