* Weaker demand offsets surprise fall in U.S. crude stocks
* Traders await OPEC's production policy decision next week
* China slows fuel imports after Olympics
(Updates prices, details on Hurricane Ike, adds analyst quote)
LONDON, Sept 5 (Reuters) - Oil prices fell on Friday as
flagging demand in the United States and other consumer nations
extended crude's losses to nearly 8 percent this week.
U.S. crude <CLc1> 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 <LCOc1> 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 U.S. government
data released on Thursday showing an unexpected drop in crude
stocks in the world's top consumer. []
Most of the U.S. 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. []
OPEC, DOLLAR
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, with the dollar hitting an 11-month high against
the euro early Friday. The dollar gave back some strength after
U.S. August jobs data showed the U.S. labor market deteriorated
further, with unemployment at more than 4-1/2 year lows.
"Overall, the dollar has been stronger than it has ever been
and right now overall demand is starting to effect the bulls,"
said Kyle Cooper, director of research for IAF Advisors.
"The economy in the U.S. and Europe are turning bad and
people realize that the growth in the economies of China, India
and Brazil will not be enough to offset what looks like a world
economic contraction."
Additional weakness came on news China, the world's second
largest oil consumer, will slash fuel imports to nearly nothing
this month after record-high purchases that filled domestic
stocks just ahead of the Olympics. []
Traders were also awaiting OPEC's next meeting on Sept. 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. []
(Reporting by Matthew Robinson in London, Gene Ramos in New
York, and Felicity Loo in Singapore)
