* Rise in OPEC supplies helps combat high prices
* Weak US economic outloook dampens demand
* Nigeria conflicts continue to threaten supplies
(Adds latest crude prices)
SINGAPORE, Aug 5 (Reuters) - Oil hovered near three-month
lows on Tuesday, as rising OPEC output and declining demand in
United States in the face of a weak economic outlook weighed on
prices.
The losses extended a steep slide from the mid-July peak
above $147 a barrel and came despite a storm in the Gulf of
Mexico that was curbing oil output, shipping and refining.
U.S. light crude <CLc1> fell $1.01 to hit $120.40 a barrel,
while London Brent crude <LCOc1> shed $1.18 to $119.50 a barrel
by 0716 GMT.
"The sentiment is more bearish now than before as concern
over slower U.S. economic growth is impeaching demand," said
David Moore, commodity strategist at Commonwealth Bank of
Australia.
High energy prices have been of concern in the United
States, the world's largest consumer of oil, already battered
by a housing and credit crisis.
The losses came after a Reuters survey showed OPEC supply
rose for a third consecutive month in July mainly because of
increased output from the world's top exporter Saudi Arabia.
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The boost in production from OPEC comes as soaring energy
prices and an economic slowdown cut into energy consumption in
the United States and Europe.
"We do expect oil prices to trend lower in the longer
term," Moore said, adding that high prices in general would
only curb demand.
However, conflicts in Nigeria and storms threatening the
oil and gas infrastructure in the Gulf of Mexico could counter
the downtrend in the short-term, he added.
Nigeria, the world's eighth-largest oil exporter, is losing
an average of 650,000 barrels of crude production a day because
of militant attacks that have cut about a fifth of its
production [].
In the United States, Tropical Storm Edouard has disrupted
shipping and refinery production as it barrelled across the
Gulf of Mexico to make landfall along the upper Texas coast on
Tuesday [].
Lower Russian oil output on a year-on-year basis could also
combat the weak sentiment.
Energy Ministry data showed on Monday that Russia's oil
production stood at 41.361 million tonnes (9.78 million barrels
per day) in July, down 1.1 percent versus July 2007, when it
stood at 9.89 million bpd [].
Traders also were nervous that supplies could be disrupted
as a result of tension between the West and the world's
fourth-largest oil producer, Iran.
The head of Iran's revolutionary guard was quoted as saying
Iran could close the Straits of Hormuz, a key Gulf shipping
route, if it were attacked over its nuclear programme.
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(Reporting by Seng Li Peng; Editing by Ramthan Hussain)
