Oil Prices Continue Lower as Demand Slows

In London, Brent North Sea crude for September delivery slipped 66 cents to settle at 112.67 dollars. Its session low was 111.07 dollars. 

"There has been a significant change in the market as the world is revaluing assets based upon the perceived health of their own economies as it relates to the suddenly stronger US economy," said Phil Flynn at Alaron Trading.

Barclays Capital analysts said that traders were concentrating on "global recessionary fears dampening the demand for oil."

But the escalating violence in Georgia between Russian and Georgian troops was largely shrugged off, analysts said.  "The market turned a blind eye to problems with the Baku-Tbilisi-Ceyhan (BTC) pipeline and the escalating conflict between Russia and Georgia," said Sucden analyst Nimit Khamar.

Fears of recession in the eurozone gained momentum Monday after official data showed a sharp fall in French industrial production in June. Analysts said the figures signal the bloc's second-biggest economy might have contracted in the second quarter.  Germany, the biggest economy in the 15-nation bloc, has had a series of disappointing indicators. It will publish second-quarter growth figures on Thursday.  The market particularly focused on news that oil imports to China, the world's second-thirstiest oil importer after the United States, fell 7.0 percent in July, the steepest decline since December.

Oil prices also fell as the dollar strengthened, which makes dollar-priced commodities more expensive for buyers with weaker currencies.  In the foreign exchange market, the euro was fetching 1.48 dollars Monday, down from 1.50 dollars Friday.  Meanwhile, a fire at the BTC pipeline in eastern Turkey, sparked by a blast last week, was extinguished on Monday, officials told Anatolia news agency.

Separatist Kurdish rebels claimed responsibility for the blast, which ripped through a section of the pipeline in Erzincan province late on August 5, causing fresh jitters on the world oil market.  Concerns over supply disruptions had pushed crude oil prices to record highs above 147 dollars in July but prices have weakened significantly in recent weeks amid slowing global economic growth.