* Oil falls over $1 to below $106 on rising dollar
* U.S. lawmakers aiming to vote on Monday on bailout
* Iran avoids new sanctions in UN council vote
(Updates prices, adds details)
By Fayen Wong
PERTH, Sept 29 (Reuters) - Oil extended its decline and
fell over a dollar to dip below $106 a barrel on Monday,
pressured by gains in the U.S. dollar amid optimism that a vote
on a $700 billion bailout to rescue the U.S. financial system
is near.
Congressional leaders from both parties said they had
reached a tentative agreement on Sunday, but questions abound
as to whether the rescue plan, which would use taxpayer funds
to buy up toxic mortgage debt, would restore confidence to
shaky markets and head off a deep recession.
U.S. light crude for November delivery <CLc1> fell $1.09 to
$105.85 a barrel by 0231 GMT, adding to Friday's losses of
$1.13.
London Brent crude <LCOc1> fell 82 cents to $102.72.
"Oil is down because of the U.S. dollar. I think the
markets are also cautious about the bank bailout and there is
some sense that the risky package could be bearish for oil
demand," said Mark Pervan, a senior resource analyst at the
Australia & New Zealand Bank (ANZ), based in Melbourne.
U.S. lawmakers were gearing up to vote on Monday on
creating a $700 billion government fund to buy bad debt and to
help ease the financial crisis, while two troubled European
banks looked set for nationalisation. []
The U.S. dollar rose against the euro and the yen on
Monday. Hopes a bailout bill would soon be passed had initially
spurred a rally in U.S. stock futures but the index shed its
early gains after initial enthusiasm about the plan faded.
[]
Although the oil market has not been short of bullish news
in the past few months, prices are still down 28 percent from
record highs above $147 a barrel struck in July as the economic
crisis and high fuel costs hurt demand in the United States and
other developed economies.
Analysts said mounting evidence of an economic slowdown in
U.S., Europe and Japan would continue to keep prices in check.
"While supply-side uncertainty suggests a floor near $100,
the economic context for this quarter and next is weak,
suggesting price rallies will be capped and/or sold into,"
Harry Tchilinguirian, a senior oil market analyst at BNP
Paribas, said in a research report.
News that Iran, the world's fourth-largest exporter of oil,
has avoided new sanctions in a United Nations vote over the
weekend also hit prices on Monday.
The U.N Security Council unanimously passed a resolution on
Saturday that again orders Iran to halt its nuclear enrichment
work but imposes none of the new sanctions Washington and its
allies wanted. []
But analysts said a slow recovery in oil and gas production
in the U.S. Gulf of Mexico, home to a quarter of U.S. output,
would offer some support for prices in the short term.
Some 57.4 percent of oil production and 52.8 percent of
natural gas output in the Gulf of Mexico remained shut as of
Sept. 25, the Minerals Management Service said on Friday.
[]
(Reporting by Fayen Wong; Editing by Michael Urquhart)
