* Traders eye weak demand as Gustav threat eases
* Storms Hanna, Ike developing in Atlantic
* U.S. data Thursday seen showing crude build, gasoline draw
(Updates prices, adds details on LOOP recovery)
By Matthew Robinson
LONDON, Sept 3 (Reuters) - Oil fell below $109 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.
U.S. crude <CLc1> traded down $1.44 to $108.27 a barrel by
1220 GMT after settling below its 200-day moving average, a key
technical level, for the first time since May 2007 on Tuesday.
London Brent crude <LCOc1> fell $1.20 to $107.14 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.
Further strength this year came from a rush of cash from
investors buying commodities as a hedge against inflation and
the weak U.S. dollar. But the dollar has since rallied, hitting
an 11-month high against a basket of major currencies on
Wednesday.
The rapid changes on the commodities market have been
bruising for some.
On Tuesday, Ospraie Management LLC said it would close down
a flagship fund, although it still manages $4 billion in other
investment funds. []
Traders said the closure could have added to losses on
commodity markets this week, but they did not expect the impact
to continue.
"I don't think one hedge fund will have much impact, though
it probably helped the market to come down," said Christopher
Bellew of Bache Commodities, adding the market remained bearish
in the short term.
"We have a strong dollar and weak hurricanes," he said.
More storms were brewing in the Atlantic but so far were not
threatening the U.S. Gulf of Mexico.
Tropical Storm Hanna could strike the U.S. East Coast, while
Hurricane Ike continued westward across the Atlantic and was
projected to be in the vicinity of the Bahamas by Sunday.
Any disruption caused by Gustav will not be fully reflected
in U.S. inventory data until next week. The latest set of data
will be released on Thursday, a day later than usual because of
a public holiday in the United States on Monday.
A Reuters poll of analysts forecast stockpiles of crude rose
100,000 barrels last week, a 1.3 million-barrel drawdown in
gasoline supplies and a 500,000-barrel build in distillates.
[]
(Additional reporting by Barbara Lewis in London and Chua
Baizhen in Singapore; editing by James Jukwey)
