Aug.19. In global petroleum market news, oil prices settled below USD 113 a barrel for the first time in over three months Monday as Tropical Storm Fay steered clear of oil production facilities in the GoM. Light, sweet crude for September delivery fell 90 cents to settle at USD 112.87 on NYMEX, after earlier rising as high as USD 115.35. It was the first time crude ended below USD 113 since May 1. In London, October Brent crude fell 61 cents to settle at USD 111.94 a barrel. Fay, the sixth named storm YTD, was approaching the Florida Keys after leaving at least eight people dead in Haiti and the Dominican Republic. The storm does not currently pose a threat to oil platforms in the Gulf, but Royal Dutch Shell PLC said it evacuated 425 workers from the region as a precaution and said it will redeploy them if the storm remains on its current track. So far during this year's hurricane season in the Atlantic Ocean, no storm has significantly damaged oil installations in the Gulf of Mexico. On the economic front, a slightly weaker dollar compared to the euro kept oil prices from sliding further. A falling dollar typically pushes up oil prices as investors buy crude and other commodities as hedges against inflation. That said, if the dollar's rising trend continues in the weeks and months ahead, it will likely cap gains in oil prices. A forecast from OPEC on Friday of lower global oil demand growth helped to keep prices from rising higher. In its monthly oil report, the cartel predicted world appetite for oil this year would grow by 1 mn bpd, a reduction of 30,000 bpd from its previous forecast for incremental demand in 2008. It also said growth for 2009 will be 900,000 bpd, which would be the lowest growth in global demand since 2002. Demand growth from the major industrialized countries will actually decline, the cartel claimed, with non-OECD countries accounting for all oil demand growth next year. On the political front, uncertainty over the conflict between Russia and Georgia also kept trading erratic earlier Monday, as traders remain nervous that oil supplies in the region could be disrupted. Russia said it has begun withdrawing troops, but U.S. officials said Moscow has positioned missile launchers in the separatist South Ossetia province. Anecdotally, some confusion apparently arose when the official military translator mixed up two Russian words and rendered the Russian noun "otvod" (pullback) as "withdrawal" ("vyvod") in English. Hence the reversal we have seen on CNN and a number of other western media sources. Oil market traders were also keeping an eye on possible tensions in Pakistan after President Pervez Musharraf announced his resignation Monday. Moving forward, there can be little doubt that market fundamentals have turned around completely over the past month, with the longer-than-expected downturn in the US economy, the effects of the US subprime market feeding through to the global economy, sagging oil demand and a bullish dollar all knocking the wind out of crude prices. In the upshot, we do not expect prices to recover until the global economy does, while WTI and crude could retrace to USD 100 or even slightly below that level.