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SYDNEY, Aug 6 (Reuters) Oil fell more than 1 percent to about $74 a barrel on Monday, extending the previous session's decline which saw prices dragged down by poor U.S. economic data.

U.S. crude which slid as much as 91 cents, or 1.2 percent in early trade, reversed some losses and was down 59 cents at $74.89 a barrel by 0558 GMT.

U.S. oil settled $1.38 lower at $75.48 a barrel on Friday, after hitting a record $78.77 on Wednesday.

London Brent was down 20 cents at $74.55 a barrel, after closing $1.01 lower on Friday.

''The sell-off was continued from Friday and largely due to the decline in the U.S. financial markets. Some investors may have taken risk adjustments and are selling out of liquid commodities assets to cover commitments in other markets,'' said Gerard Burg, an oil and gas analyst at the National Bank of Australia.

''Apart from the U.S. factor, there are no major fundamental stories dragging down prices.'' Fears of a sharp economic slowdown in top energy consumer United States were heightened after U.S. share markets fell on Friday, following a report showing weaker-than-expected job growth last month and another on slowing service-sector growth.

Concerns about mortgage losses intensified after the collapse of two hedge funds, which prompted comments from Bear Stearns' chief financial officer that the fixed-income market turmoil was worse than the Internet bubble.

Analysts said a reduction in forecasts for hurricanes in the Atlantic also dragged down oil prices.

Colorado State University trimmed its forecast for the 2007 Atlantic storm season on Friday and predicted 15 tropical storms, with eight growing to hurricane strength, including four major hurricanes.

The updated forecast was lower than the team's May 31 forecast of 17 tropical storms, nine hurricanes and five major hurricanes.

Analysts said news of milder weather and poor U.S. economic data also provided prime opportunity for investors to cash in their profits, after oil prices touched the all-time high on Wednesday.

But analysts expect the oil price decline to be short-lived.

''The market is still quite tight and given how the recent factors which have dragged down oil prices were not related to the crude market, their effects shouldn't last too long,'' Burg said. ''Prices should start climbing up later this week.'' Prices have been supported this week by comments from OPEC officials who said the cartel would not increase output when it next meets in September. Some analysts have forecast prices could spike to as high as $95 a barrel later this year unless the Organization of the Petroleum Exporting Countries opens the taps.

REUTERS SBA DB1259