* Traders eye weak demand as Gustav threat eases
* Storms Hanna, Ike developing in Atlantic
* U.S. data Thursday seen showing crude build
(Updates prices with U.S. settlement)
By Matthew Robinson
LONDON, Sept 3 (Reuters) - Oil prices fell slightly to
below $109 a barrel 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 36 cents to settle at $109.35
a barrel by 1700 GMT, after ending on Tuesday below its 200-day
moving average, a key technical level, for the first time since
May 2007. London Brent <LCOc1> fell 32 cents to $108.02.
Prices have fallen by more than $6 since Friday after
Hurricane Gustav proved to be less devastating than feared.
Initial checks on U.S. energy installations in the Gulf of
Mexico showed little damage, and the Louisiana Offshore Oil
Port -- the nation's only deepwater port -- was expected to
resume operations in the next couple of days.
Companies closed 14 refineries and shut in all of the 1.3
million barrels per day of oil production in the Gulf at the
peak of the storm's impact Monday, but by Wednesday two
refineries had restarted and some offshore production was
trickling back online.
Now that 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 set 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 in the commodities market have been
bruising for some.
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," Christopher Bellew
of Bache Commodities said, 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 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 200,000 barrels last week, gasoline supplies fell 1.4
million barrels and distillates rose 500,000 barrels.
(Additional reporting by Barbara Lewis in London and Chua
Baizhen in Singapore; Editing by Christian Wiessner)
