Oil fell by more than $2 today as concerns over weak demand outweighed an unexpected drop in US crude oil inventories.
US crude fell $2.08 to $107.25 a barrel, reversing an earlier gain of about $1. London Brent crude fell $2.33 to $105.73.
US government inventory data showed total demand for oil products, such as gasoline and distillates, over the past four weeks fell 3.5% from a year ago.
Crude oil inventories fell 1.9 million barrels, compared with a forecast of a 200,000 barrel increase ahead of the release of the data. But inventories at Cushing, the delivery point for US crude, increased. Inventories of gasoline decreased by 1.0 million barrels.
Hurricane Gustav did not cause much physical damage to oil production facilities in the Gulf region, home to a quarter of US crude output, but 11 refineries on the coast remained shut.
