LONDON, Aug 12: Crude prices slid further on Tuesday, as traders took their cue from the stronger dollar and Russia, which ordered a halt to its military offensive against Georgia.Oil fell as the dollar hit a near six-month peak against the euro. A stronger US currency tends to reduce demand for dollar-priced goods which become more expensive for buyers holding weaker currencies.

The market was also dampened after the International Energy Agency forecast a steep drop in demand in advanced countries because of high prices and economic slowdown.

London’s Brent North Sea crude for September delivery lost 89 cents to 111.78 dollars per barrel in electronic trading on Tuesday after falling as low as 110.47.

New York’s main contract, light sweet crude for September delivery sank one dollar to 113.45.

“Oil futures were lower (on Tuesday), extending last night’s losses under pressure from the stronger dollar and as news emerged that Russia was halting its military operation against Georgian troops in a conflict surrounding the breakaway region of South Ossetia,” said Sucden analyst Andrey Kryuchenkov.“Geopolitical concerns always provide good support to oil prices and this news should offer some relief to investors worried about exports of Azeri crude from ports in Georgia.” Georgia is not an oil producer but the conflict had raised concerns in the oil market because the country is a key transit point for crude and gas exports from Azerbaijan to Western markets.

Russia’s President Dmitry Medvedev on Tuesday ordered a halt to the military offensive against Georgia after the army staged new strikes against its neighbour.

However, Georgia said that Russian attacks on the country continued despite Russia’s pledge to halt military operations.

Meanwhile, the Russian airforce attacked a key oil pipeline running through Georgia on Tuesday but there was no word yet on whether it had been damaged, the secretary of Georgia’s National Security Council told AFP.

In the foreign exchange market on Tuesday, the European single currency sank as low as 1.4816 dollars -- a level last reached on February 26.

Kryuchenkov added: “The strong recovery in the dollar adds more pressure to the sector, which is already suffering from fears over slowing global growth.

“At the same time, it emerged today that the IEA has raised its demand forecast for 2009 by 70,000 barrels to 87.8 million barrels per day.” The IEA added in its monthly report that oil demand was slowing in advanced economies as people ease up on driving, supplies are rising and the market is set to cool well into next year.

But it is too soon to declare the price boom over for now, the IEA warned, pointing to unexpected risks such as conflict in Georgia which threatened “a key energy transit hub.” On July 11, crude prices had touched historic peaks above 147 dollars per barrel, but have since tumbled on mounting fears about global economic growth and weaker demand.—AFP