* OPEC cuts output unexpectedly by 520,000 bpd
* Oil companies shut US offshore output due to hurricane
* U.S. crude, gasoline stocks fall sharply
* IEA cuts 2008, 2009 global oil demand growth forecasts
* Dollar index hits one-year high
(Updates prices, details)
By Richard Valdmanis
NEW YORK, Sept 10 (Reuters) - Oil prices dipped to fresh
five-month lows on Wednesday as weak demand and a strong dollar
offset a surprise OPEC production cut agreement and back-to-back
hurricanes in the Gulf of Mexico that have started cutting deeply
into U.S. energy supplies.
U.S. crude <CLc1> fell 68 cents to settle at $102.58 a barrel
after dropping as low as $101.36, the lowest since early April.
London Brent crude <LCOc1> fell $1.37 to $98.97.
The losses came after the International Energy Agency cut its
world oil demand forecasts for this year and next year as high
prices and mounting economic troubles cause consumers and businesses
to conserve. []
U.S. oil demand is already running about 3.8 percent below last
year, according to government data.
Oil and other commodity prices were also pressured lower on
Wednesday by gains in the U.S. dollar -- a factor that weakens
commodities by undermining the purchasing power of buyers using
other currencies. The dollar scaled a one year peak against a basket
of currencies on Wednesday. []
Oil prices have dropped about 30 percent since a record high
over $147 a barrel in mid-July, hit by concerns over slowing
consumption and a rebounding dollar.
Wednesday's losses were tempered by news OPEC decided to lower
its production ceiling to 28.8 million bpd from earlier targets of
29.67 million bpd. []
Analysts said the group was seeking to support the market at
around $100 a barrel, though some were skeptical the cartel would
follow through on the agreement.
Sources at oil refineries around the world told Reuters this
week that OPEC kingpin Saudi Arabia had left its crude supply
allocation unchanged for October.
Meanwhile, oil companies shut U.S. offshore oil and natural gas
platforms and readied coastal refineries on Wednesday as the latest
hurricane churned into the Gulf of Mexico on a track for the Texas
coast. []
Oil output from the region, home to a quarter of U.S. crude
production, was less than 5 percent of normal as Hurricane Ike
approached just over a week after Hurricane Gustav spun through the
same area toward Louisiana.
The back-to-back hurricanes were already cutting deeply into
U.S. energy inventories with crude oil stocks down 5.9 million
barrels last week, according to the Energy Information
Administration. []
Gasoline and distillate stocks also fell as Gustav pushed
refinery operations to their lowest levels since 2005.
Analysts said the impact of the EIA report was limited as
regional data showed crude oil stockpiles along the Gulf Coast
actually rose last week in the midst of the nationwide draw -- a
sign that the weaker refinery activity was offsetting the loss of
offshore crude production.
(Reporting by Ikuko Kao, Matthew Robinson and Jane Merriman in
London, Angela Moon in Seoul and Jonathan Leff in Singapore; Editing
by Marguerita Choy)
