* Oil falls below $115 as dollar gains
* Fighting in South Ossetia may affect energy transit
* Baku-Tblisi-Ceyhan pipeline could be back up in 10 days
(Recasts, updates prices, market activity; adds byline)
By Matthew Robinson
NEW YORK, Aug 8 (Reuters) - Oil dropped $5 to a three-month
low on Friday as the dollar surged and concerns about global
economic growth weighed on demand expectations.
The fall came even as Russia sent forces into Georgia, a
key energy transit region, to repel a Georgian assault on the
breakaway South Ossetia region.
U.S. light crude <CLc1> settled down $4.82 to $115.20 a
barrel, before falling to $114.90 in post-settlement trade,
the lowest level since early May. Prices have slid since
hitting a record high over $147 a barrel on July 11.
London Brent crude <LCOc1> settled at $113.33, down $4.53.
"It seems that we've got a lot of selling based on the
stronger dollar," said Peter Beutel, president of trading
consultants Cameron Hanover.
"Energy demand destruction and the dollar return have
formed a quiet alliance to bring the oil market down, and today
the louder of the two is the dollar."
Strong demand from emerging economies like China sent oil
on a six-year rally, with prices up sevenfold at their peak.
More support came from investors rushing into commodities as a
hedge against inflation and the weak dollar.
But mounting global economic problems and high fuel prices
have begun to hurt demand.
The dollar surged against the euro and was on track for its
biggest one-day gain in four years as concerns mounted that the
U.S. economic slowdown was spreading around the world. []
"The market has been ignoring the Tbilisi pipeline
situation, and now the problems with Russia -- the move lower
really now has a momentum of its own with the financial players
coming out," said Olivier Jakob at Petromatrix.
Georgia's pro-Western president said on Friday the two
countries were at war as Georgian troops backed by warplanes
pounded separatist forces in South Ossetia and Russia sent
forces to repel the assault.
Analysts were concerned fighting could disrupt energy
exports from the Caspian region that travel through Georgia.
Oil had risen on Thursday due to the disruption of supplies
through the Baku-Tblisi-Ceyhan pipeline following a blast this
week in Turkey.
The pipeline was still burning, halting loadings of Azeri
Light crude shipped to the Turkish port of Ceyhan, but the fire
could be extinguished on Friday or Saturday.
Once the blaze is out, the pipeline could be reopened
within 10 days. BP has cut output by at least 400,000 barrels a
day at the Azeri-Chirag Gunashli oilfields, traders said.
[]
(Reporting by Matthew Robinson, Robert Gibbons, Gene Ramos and
Richard Valdmanis in New York; Margaret Orgill, Barbara Lewis
and Ikuko Kao in London; and Felicia Loo in Singapore; Editing
by David Gregorio)
