Oil drops to USD 106.38 a barrel

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Crude oil to remain in $50-100 range: FitchOil surges to near $109 on hurricane threatOil drops to USD 106.38 a barrelOil pauses at $109 on demand concerns

London, September 5: : Oil prices fell more than $1 on Friday as flagging US demand and the stronger dollar extended crude's losses to 8 per cent this week.

US crude traded down $1.51 cents to $106.38 a barrel by 0922 GMT after settling on Thursday at the lowest level since April 4. London Brent crude fell $1.45 to $104.85 a barrel.

Slowing demand in the United States has sent crude down from record highs over $147 a barrel in July, and overshadowed US government data released on Thursday showing an unexpected drop in crude stocks in the world's top consumer.

"Continuing worries about the international economic outlook, a firmer US dollar, and, possibly, market speculation that OPEC may not move production levels following next week's OPEC meeting left oil prices softer," David Moore, commodity strategist from Commonwealth Bank of Australia, said in a note.

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 eyeing more storms brewing in the Atlantic. Hurricane Ike weakened slightly as it charged toward the Bahamas, though it was still days away from approaching the United States.

Until July, 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.

Gains in the greenback over the past two months have helped push oil down, hitting a 10-month high against the euro on Thursday.

OPEC meets on Sept. 9, with some expectations it may opt to cut oil prices to prevent a build-up of surplus stocks that could deepen the slump in prices, which have fallen sharply from the July record high.