LONDON (Agencies): Oil dropped below $112 a barrel on Friday, down more than $2.50, to its lowest level since early May, pressured by faltering global demand, rising supply and a stronger dollar.
Crude has fallen sharply since reaching an all-time high of $147.27 a barrel on July 11 partly on concern about weakening demand. It fell as low as $111.85, the lowest since May 2, on Friday.
U.S. crude for September delivery was last trading down $2.77 at $112.24 a barrel by 1420 GMT. The contract will expire on Aug. 20. London Brent's new nearby contract, October, lost $2.52 to $111.16 a barrel.
"It looks like we might be trying to find a short term price floor. We've tested $114 and $113, we might well hover here for a little while before we make another move," Simon Wardell, oil analyst at Global Insight said.
Meanwhile, the dollar powered to a six month high against the euro Friday, boosted by jitters on shrinking euro area economic growth with extra fuel from position liquidation in commodities and energy markets.
The dollar's push higher knocked an already floundering sterling to a 22-month low approaching $1.85, while the US currency also struck a seven-month high against a basket of six major currencies.
Commodity markets hit the slopes as the dollar's rally found fresh legs, led by a near 3 percent slide in gold and oil falling almost 2 percent.
Another reports adds, Gold prices tumbled underneath 800 dollars per ounce on Friday, hitting a ten-month low point as the precious metal was hampered by the strong US currency and weak oil prices, analysts said.
On the London Bullion Market, the price of gold slid to 772.98 dollars per ounce. That was the lowest point since the end of October.
Gold, which is used in jewellery, dentistry and electronics, has shed one quarter of its value since striking a record high of 1,032.70 dollars in March.
