* Dealers focus on soft oil demand, shrug Gustav impact
* Traders await OPEC's decision next week
* China slows fuel imports after Olympics
(Updates prices with settlements)
By Matthew Robinson
LONDON, Sept 5 (Reuters) - Oil prices fell to a fresh
five-month low on Friday 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 23 percent of the nation's crude production and 6 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 $1.66 to settle at $106.23 a
barrel, the lowest level since April 4. London Brent crude
<LCOc1> fell $2.21 to $104.09.
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 data from 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, as the country suffers from
a banking crisis. []
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 8.6 million barrels of crude oil production, the
equivalent of over 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 bringing production back on line
and have reported no major damage from the storm, but experts
expect a full recovery could be slow as another storm,
Hurricane Ike, threatens to hit the region next week.
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.
(Additional reporting by Gene Ramos in New York and Felicity
Loo in Singapore; Editing by Christian Wiessner)
