Oil extends fall on continued US economic concerns

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SYDNEY, Oct 8 (Reuters) Oil prices fell on Monday, extending the previous session's losses, as investors turned their focus to a slowdown in the US economy after hurricane concerns in the Atlantic abated.

US crude fell 36 cents to .86 a barrel in Globex electronic trading by 0108 GMT.

Oil settled down 22 cents at .22 a barrel on Friday, as upbeat U.S. employment data failed to convince investors that demand for energy would rise considerably in coming months, as a high interest rate environment and a slumping housing sector were expected to drag on growth.

London Brent crude shed 26 cents to .64.

''An accelerating downturn in the U.S. or global economy could erase oil demand growth and we intend keeping a close eye on critical signposts,'' UBS' commodities analyst Gordon Ramsay said in a note to clients.

The US economy added more jobs than expected in September and job growth figures for July and August were revised higher, but the dollar continued to fall against other major currencies, as investors bet that the Federal Reserve would still cut US interest rates again.

Worries of weather-related supply disruptions abated after the US National Hurricane Centre said on Friday it did not expect any of six Atlantic low pressure systems to develop into a tropical cyclone, forcing oil prices to retreat further.

Ramsay said he expected oil prices to ease in the fourth quarter and the first quarter of next year, weighed down by a modest US economic slowdown and a relatively warm winter in the Northern Hemisphere.

Other factors adding to oil's short-term selling pressure include the fading of hurricanes season in the Atlantic as well as lower crude demand as refineries in the United States shut down for maintenance, BNP Paribas said in a research note.

But speculation that oil cartel OPEC could cut crude production from November provided some support to prices.

Commenting on the decision to hike output in November, Iranian caretaker Oil Minister Gholamhossein Nozari said on Saturday OPEC could revise a decision to boost crude production from November if that increase pushed prices lower than was economical for producers, the ISNA news agency reported.

In a bid to cool oil prices, which have jumped over 37 per cent since the start of the year to a record of .90 a barrel last month, the Organization of the Petroleum Exporting Countries (OPEC) agreed to raise output by 500,000 barrels per day from Nov. 1.

Speculators on the New York Mercantile Exchange crude oil market increased net long positions in the week to Oct. 2, the Commodity Futures Trading Commission said on Friday.

Speculators in the RBOB gasoline market trimmed net longs as did speculators in the heating oil market, the CFTC report said.

REUTERS TB AS-753

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