Oil falls as gloomy economic outlook weighs on demand

London: Oil prices fell on Friday as flagging demand in the United States and other consumer nations extended crude's losses to nearly 8 per cent this week.

US crude traded down 77 cents to $107.12 a barrel by 1401 GMT after settling on Thursday at the lowest level since April 4. London Brent crude fell $1.05 to $105.25.

Slowing demand in the United States due to high fuel costs and wider economic problems has sent crude down from record highs over $147 a barrel in July, overshadowing US government data released on Thursday showing an unexpected drop in crude stocks in the world's top consumer.

Most of the US Gulf of Mexico production shutdowns related to Hurricane Gustav are expected to be reflected in next week's inventory data.

Energy companies have been slowly bringing back shut-in oil and natural gas production and 11 refineries remained closed on Thursday following Gustav, but early inspections showed little damage to installations.

Traders were also keeping an eye on Hurricane Ike, which is expected to reach the Bahamas early next week and South Florida by mid-week.

Demand in emerging economies

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.

Opec meet next week

Traders were also awaiting Opec's next meeting on September 9, with some expectations the group will trim supplies unofficially while leaving public output targets unchanged.

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.