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Oil falls below $72 on global economy doubts

LONDON (Reuters) - Oil fell to a one-month low under $72 a barrel on Monday, with Brent crude marking a sixth straight session of losses on lingering concerns over slowing global economies and demand for fuel.

A taxi driver re-fuels his taxi at a Shell petrol station in London March 16, 2010. REUTERS/Luke MacGregor

U.S. crude for August fell 39 cents to $71.75 a barrel by 3.10 p.m. EST, recovering from a low of $71.34 a barrel, its weakest since June 8. With U.S. activity muted by the Independence Day holiday, total trading in all contracts came to only 29,000 lots, under 5 percent of normal.

ICE Brent crude for August dipped 18 cents to end at $71.47.

“Where oil moves next very much depends on equity market sentiment and the economic outlook and as long as economic pessimism persists oil should hold at the lower end of the $70-$80 range,” said Carsten Fritsch, oil analyst at Frankfurt-based Commerzbank.

Asia's stock markets were mixed on Monday, while European shares fell to their lowest close in nearly six weeks, with miners weaker on a gloomier economic outlook and volumes thin as Wall Street was closed. .EU

The New York Mercantile Exchange (NYMEX), which was trading only electronically on Monday, will combine Monday’s and Tuesday’s trading sessions because of the U.S. holiday, with a single settlement price issued on July 6.

Oil prices fell every day last week for a cumulative decline of 8.4 percent, the biggest weekly fall since early May, and some long-time bulls are pulling in their horns.

Barclays Capital, which has long predicted higher oil prices, lowered its crude price forecasts for this year and next due to persistent weak economic indicators, although its forecasts remain well above current prices.

WEATHER

Gulf of Mexico oil operations continued to restart on Friday after being shut as a precaution before Hurricane Alex hit Mexico last week, although a new weather in the Caribbean Sea could begin to threaten Gulf oil rigs.

The weather system between Jamaica and Honduras, which weather models currently show rounding the Yucatan peninsula and tracking straight toward the Texas coast, has a 30 percent chance of developing over the next two days into a tropical cyclone, a category that includes tropical storms and hurricanes, the U.S. National Hurricane Center said.

Money managers cut net long crude oil positions on the New York Mercantile Exchange in the week through Tuesday, the Commodity Futures Trading Commission said on Friday, reducing bets that prices will rise.

Open interest positions remained bulked at August crude oil $70 and $65 put options on Friday, an indication that traders are betting prices will fall toward those levels.

Editing by Sue Thomas and Alison Birrane; Editing by David Gregorio

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