* Oil falls $5 a barrel to lowest level since early June
* Concern eases about Tropical Storm Dolly
(Adds details, updates prices, changes dateline from LONDON)
By Richard Valdmanis
NEW YORK, July 22 (Reuters) - Oil prices fell $5 a barrel to
a six-week low on Tuesday as dealers anticipated a tropical
storm moving over the Gulf of Mexico would miss most major oil
and gas installations offshore.
The losses come after the biggest weekly price decline in
oil's history last week which chopped $17 off the cost of a
barrel as the market focused on mounting U.S. economic troubles
and sliding demand.
"Dolly passing and recognition of deteriorating global
economic conditions," said Mike Fitzpatrick, vice president at
MF Global, commenting on crude's slide.
U.S. crude futures <CLc1> fell $4.39 to $126.65 a barrel by
1700 GMT after dipping as low as $125.63 -- the lowest level
since early June. London Brent <LCOc1> was off $4.06 at
$128.55.
Oil remains nearly 30 percent higher than at the start of
this year, and more than six times higher than in 2002, in a
rally driven by startling growth in China and other developing
Asian economies.
Tropical Storm Dolly, which is expected to become a
hurricane within two days before hitting the coast near the
border of Mexico and Texas, has so far triggered only minor
production shutdowns from offshore oil platforms.
Exxon Mobil Corp <XOM.N> and Anadarko <APC.N> said on
Tuesday they trimmed output slightly as a precaution against the
high winds and seas [], and other companies said
they were evacuating workers in the path of the storm.
But oil traders and analysts said the overall effect of
Dolly on the oil patch would likely be very light.
"Barring a veer north, the risks of an oil price disturbing
event are low," Citi analysts said in a research note.
Hurricanes in 2005 temporarily knocked out a quarter of U.S.
crude oil production and refining capacity, sending oil prices
to then-record highs.
Oil's slide has taken it about 14 percent below the July 11
peak of more than $147 a barrel, with traders eyeing growing
stockpile levels and slumping demand for gasoline in the United
States in response to high prices.
The next set of government data on U.S. oil inventories, for
release on Wednesday, was expected to show crude stocks had
fallen by 700,000 barrels, according to a Reuters poll of
analysts. []
Crude stocks unexpectedly rose in the previous week by 3.0
million barrels, helping to drive oil prices lower.
The market appeared little affected by reports of a halt of
exports from Iraq's northern fields through Turkey due to a
legal dispute and a delay of several days in Iraqi shipments
from the southern port of Basra due to shipping congestion.
[]
(Additional reporting by Richard Valdmanis and Janet McGurty in
New York, Annika Breidthardt in Singapore; editing by Matthew
Lewis)
