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Oil extends fall on continued U.S. economic concerns

Mon Oct 8, 2007 6:44am IST
 
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By Fayen Wong

SYDNEY (Reuters) - Oil prices fell on Monday, extending the previous session's losses, as investors turned their focus to a slowdown in the U.S. economy after hurricane concerns in the Atlantic abated.

U.S. crude fell 36 cents to $80.86 a barrel in Globex electronic trading by 0108 GMT.

Oil settled down 22 cents at $81.22 a barrel on Friday, as upbeat U.S. employment data failed to convince investors that demand for energy would rise considerably in coming months, as a high interest rate environment and a slumping housing sector were expected to drag on growth.

London Brent crude shed 26 cents to $78.64.

"An accelerating downturn in the U.S. or global economy could erase oil demand growth and we intend keeping a close eye on critical signposts," UBS' commodities analyst Gordon Ramsay said in a note to clients.

The U.S. economy added more jobs than expected in September and job growth figures for July and August were revised higher, but the dollar continued to fall against other major currencies, as investors bet that the Federal Reserve would still cut U.S. interest rates again.

Worries of weather-related supply disruptions abated after the U.S. National Hurricane Centre said on Friday it did not expect any of six Atlantic low pressure systems to develop into a tropical cyclone, forcing oil prices to retreat further.

Ramsay said he expected oil prices to ease in the fourth quarter and the first quarter of next year, weighed down by a modest U.S. economic slowdown and a relatively warm winter in the Northern Hemisphere.  Continued...

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