Oil falls below $108 on demand
Oil fell more than $2 to below $108 a barrel on Wednesday, weighed down by slowing demand in the United States and other consuming nations and signs the U.S. oil sector would recover quickly from Hurricane Gustav.
Oil hovers at $102U.S. crude traded down $2.16 to $107.55 a barrel by 4:06 p.m. after settling below its 200-day moving average, a key technical level, for the first time since May 2007 on Tuesday.
London Brent crude fell $1.79 to $106.55 a barrel.
Prices have fallen by more than $7 from Friday after Hurricane Gustav proved to be less devastating than feared.
Initial checks on U.S. Gulf of Mexico energy installations showed little damage, and the Louisiana Offshore Oil Port (LOOP) - the nation's only deepwater port - expects to resume operations in the next couple of days.
Companies had closed 13 refineries and shut in all of the 1.3 million barrels per day (bpd) of oil production in the Gulf and 95.4 percent of the region's natural gas output.
Now the storm has passed, analysts said slowing oil demand in the United States and other consumer nations would continue to depress oil prices, which have dropped from a record of $147.27 on July 11.
DEMAND DESTRUCTION
"It's the economy, economy, economy. Everyone's worried about demand destruction," said Robert Nunan, a risk management executive at Tokyo-based Mitsubishi Corp.
Surging oil demand in emerging economies such as China and India underpinned a six-year rally in crude prices that sent prices up sevenfold at their peak.
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