LONDON, Sept 1: Oil prices dived to four-month lows on Monday, sliding below 110 dollars in London as a weakening Hurricane Gustav reduced the threat of damage to energy facilities in the Gulf of Mexico, analysts said.

Brent North Sea crude for delivery in October plunged as low as 109.20 dollars a barrel, a level last seen on May 1. It later recovered slightly to stand at 110 dollars, a drop of 4.05 dollars from Friday’s close.

New York’s main contract, light sweet crude for delivery in October, slid 4.07 dollars to 111.39 dollars a barrel after touching as low as 110.63, which was also four-month nadir.

Crude futures had risen by more than a dollar in Asian trading on Monday after Hurricane Gustav forced the suspension of almost all US energy production in the Gulf of Mexico, traders said.

“Crude prices have pulled back since opening higher, as market participants believe the impact from Hurricane Gustav ... will not be as bad Hurricane Katrina” on oil installations, said Sucden analyst Nimit Khamar.

US officials said on Sunday that more than 96 per cent of Gulf oil production and 82 per cent of natural gas output had been stopped because of Gustav.

About one quarter of US oil production comes from the Gulf, while the United States is the world’s biggest energy-consuming nation.

Falling demand for crude oil because of a slowing global economy has caused oil prices to drop in recent weeks from their record highs of more than 147 dollars a barrel reached in July.

Some members of OPEC, which produces about 40 percent of world oil, have expressed concerns over the recent fall in prices, sparking speculation the cartel could cut output if the price falls below 100 dollars.—AFP