Oil prices fell more than $1 on Friday as flagging U.S. demand and the stronger dollar extended crude's losses to 8 percent this week.
U.S. crude traded down $1.51 cents to $106.38 a barrel by 0922 GMT after settling on Thursday at the lowest level since April 4. London Brent crude fell $1.45 to $104.85 a barrel.
Slowing demand in the United States has sent crude down from record highs over $147 a barrel in July, and overshadowed U.S. government data released on Thursday showing an unexpected drop in crude stocks in the world's top consumer.
"Continuing worries about the international economic outlook, a firmer U.S. dollar, and, possibly, market speculation that OPEC may not move production levels following next week's OPEC meeting left oil prices softer," David Moore, commodity strategist from Commonwealth Bank of Australia, said in a note.
Most of the U.S. Gulf of Mexico production shutdowns related to Hurricane Gustav are expected to be reflected in next week's inventory data.
Energy companies have been slowly bringing back shut-in oil and natural gas production and 11 refineries remained closed on Thursday following Gustav, but early inspections showed little damage to installations. Traders were eyeing more storms brewing in the Atlantic. Hurricane Ike weakened slightly as it charged toward the Bahamas, though it was still days away from approaching the United States.
Until July, surging oil demand in emerging economies like China had supported a six-year record rally, with additional strength coming from a rush of cash from investors seeking to hedge against inflation and the weak dollar.
Gains in the greenback over the past two months have helped push oil down, hitting a 10-month high against the euro on Thursday.
OPEC meets on Sept. 9, with some expectations it may opt to cut oil prices to prevent a build-up of surplus stocks that could deepen the slump in prices, which have fallen sharply from the July record high.
Iran has said the producer group may need to cut oil supplies by as much as 1.5 million barrels per day, or nearly 5 percent, to balance global markets by early next year.
