Oil Slides to 5-week Low


Oil prices sank to their lowest in more than five weeks on Monday, pressured by expectations OPEC may agree to boost oil output at a meeting this week, plus signs of a turnaround in the U.S. dollar.

But oil's $10 slide last week away from record highs of nearly $100 a barrel may have reduced the chances of a production increase from the Organization of the Petroleum Exporting Countries which meets in Abu Dhabi on Wednesday.

By 7:22 a.m. EST U.S. light, sweet crude for January delivery was down 83 cents at $87.88 a barrel, above an intraday low of $87.47, its weakest since October 24. Brent crude was down 79 cents at $87.47.

Prices slumped by $9.47 a barrel last week, the biggest nominal weekly loss ever, depressed by the prospect of an OPEC output increase, fears of a U.S. economic slowdown and a recovery in the U.S. dollar.

Last week, the U.S. dollar rose 1.5 percent against a basket of currencies, boosted by the view that the U.S. Federal Reserve will act to revive the flagging U.S. economy.

The world's top exporter convinced others in OPEC to agree a 500,000 barrel per day (bpd) increase in September, but for the most part that rise failed to check oil's rally.

Oil's surge from below $70 in mid-August was fuelled by the weakening dollar and fears over winter fuel supplies, but last week sentiment seemed to shift in response to growing signs of economic weakness in the United States, the world's top energy consumer.


Reuters
12/3/2007 7:52:56 AM