* Dealers focus on soft oil demand, shrug Gustav impact
* China slows fuel imports after Olympics
* Traders await OPEC's decision next week
(Updates prices, details throughout)
By Matthew Robinson
LONDON, Sept 5 (Reuters) - Oil prices fell more than $2 on
Friday to a fresh five-month low on flagging demand in the
United States and other consumer nations, extending crude's
losses to 8 percent this week.
The market shrugged off continued production problems in
the United States in the wake of Hurricane Gustav, which left
some 25 percent of the nation's crude production and 10 percent
of its refining idled and in slow recovery.
"The economy in the United States and Europe is turning bad
and people realize that the growth in the economies of China,
India and Brazil will not be enough to offset what looks like a
world economic contraction," said Kyle Cooper, director of
research at IAF Advisors in Houston.
U.S. crude <CLc1> traded down $2.15 to $105.74 a barrel by
1550 GMT after settling on Thursday at the lowest level since
April 4. London Brent crude <LCOc1> fell $2.35 to $103.95.
U.S. oil demand over the past four weeks has been running
about 3.5 percent below a year ago and gasoline consumption
appears on track for its first annual decline since the early
1980s, according to the U.S. Energy Information
Administration.
Further fueling worries about the economy, U.S. data on
Friday showed the unemployment rate rising to 6.1 percent, the
highest level in nearly five years. []
Oil prices have been on a steep downtrend since hitting a
record over $147 a barrel in mid-July, raising the possibility
that OPEC will cut production when it meets next week in Vienna
to stem the slide. []
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. []
Dealers said mounting evidence of slowing global energy
demand outweighed continued production problems in the Gulf of
Mexico and along the U.S. Gulf Coast after Hurricane Gustav,
which is expected to trigger deep declines in commercial
inventories in the coming weeks.
Shutdowns caused by the storm have already cut a cumulative
total 7.4 million barrels of crude oil production, the
equivalent of a third of U.S. daily consumption. But onshore
demand for crude has also dipped due to refinery outages,
mitigating the impact of the offshore outages.
Energy companies have been slowly bringing production back
on line and have reported no major damage from the storm, but
experts expect a full recovery could take weeks.
Traders were also keeping an eye on Hurricane Ike, which is
expected to reach the the eastern Gulf of Mexico by next
Wednesday, according to the National Hurricane Center.
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.
But China, the world's second largest oil consumer, is
expected to slash fuel imports to nearly nothing this month
after record-high purchases that filled domestic stocks just
ahead of the Olympics. []
Gains in the greenback over the past two months have also
helped push oil down, with the dollar briefly hitting an
11-month high against the euro early Friday.
(Reporting by Matthew Robinson in London, Gene Ramos in New
York, and Felicity Loo in Singapore; editing by Jim Marshall)
