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Oil falls below $114 on bearish global demand

SINGAPORE - Oil slid by more than a dollar to below $114 a barrel on Friday on bearish sentiment over faltering global demand and rising supply, while a stronger dollar prompted funds to exit.

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US light crude for September delivery fell $1.10 to $113.91 a barrel by 0409 GMT, extending a loss of 99 cents on Thurday.

London Brent crude for the new front-month October contract tumbled $1.05 to $112.63 a barrel.

Oil has lost a fifth of its value in just over a month, after a record peak of $147.27 a barrel hit in mid-July, in part because of weaker demand.

‘The demand side is a major concern. Supplies from OPEC countries are rising but there is a shortage of buyers. The industrial use in China has been cut back,’ said Gerard Burg from National Australia Bank.

There was further proof that the economic malaise that had affected the United States was spreading globally, with the economy of the 15-nation euro zone contracting 0.2 percent in its worst second quarter since 1995.

The data, along with news that US inflation had hit a 17-year high, saw the euro extend losses to a new six-month low against the dollar below $1.48 on Friday.

The weak economic news adds to fears that high crude prices and slowing economies will mean less purchases of gasoline and other oil products, after the world's number one and two consumers, the United States and China, reported slowing oil demand in data out earlier this week.

The situation in Georgia remained tense, with Russian troops deployed around three towns. The United States will urgently press Russia to ensure free access to Georgian ports and the unfettered movement of ships from the ex-Soviet state, senior US envoy Matthew Bryza said on Thursday.

British oil group BP resumed gas exports from Azerbaijan to Turkey via Georgia, but the oil pipeline to the Black Sea port of Supsa remained closed.