month

Oil prices closed at their lowest level in five months as a lower-than-expected drop in US gasoline stockpiles gave traders more reason to believe that a cooling economy is forcing Americans to drive less.

Light, sweet crude for October delivery fell $US1.46 to settle at $US107.89 a barrel on the New York Mercantile Exchange. It was the lowest settlement price for a front-month contract since April 4.

In London, October Brent crude fell $US1.76 to settle at $US106.30 a barrel on the ICE Futures exchange.

Crude prices have fallen for five straight sessions, extending an almost two-month slide as traders shift their attention away from supply-threatening storms and back toward a stronger dollar and evidence of falling demand.

In its weekly inventory report, the Energy Department's EIA said US gasoline stocks fell by one million barrels to 194.4 million barrels for the week ending August 29, less than the 1.8 million-barrel drop analysts surveyed by energy research firm had Platts expected.

In other Nymex trading, heating oil futures fell 5.51 cents to settle at $US3.0237 a gallon, while gasoline futures fell 2.64 cents to settle at $US2.7404 a gallon. Natural gas futures rose 5.8 cents to settle at $US7.322 per 1,000 cubic feet.

COMEX

Gold fell for the fourth straight day as the euro weakened against the dollar, eroding the appeal of the precious metal as an alternative investment. Silver was little changed.

Gold futures for December delivery fell $US5, or 0.6 per cent, to $US803.20 an ounce on the Comex division of the New York Mercantile Exchange. The metal has dropped 4.1 per cent since August 28.

Silver futures for December delivery fell 0.7 cent to $US12.94 an ounce on the Comex. Silver has fallen 13 per cent this year, while gold dropped 4.2 per cent.

The euro fell as much as 1.2 per cent against the dollar after the European Central Bank kept the benchmark rate at a seven-year high and said risks to growth remain. Gold reached a record in March as the euro headed toward an all-time high in July.