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Crude Oil Hit Four-Week Low

The benchmark U.S. crude is well below its record high of almost $50 a barrel.

Updated from 3:23 p.m. EDT

Crude oil prices closed at a four-week low Monday, having only snapped a five-session losing streak Friday.

The October futures contract ended down 90 cents, or about 2%, to $42.28 in floor trading on the New York Mercantile Exchange, after morning gains evaporated. Based on Monday's close, prices are down more than 14% since touching a record intraday high of $49.40 Aug. 20, when the September contract expired.

Traders and analysts had been expecting a sizable correction after prices routinely hit record highs in the first three weeks of August, driven by a host of worries about exports from Iraq, Russia and Venezuela -- three top oil-producing countries.

New damage to Iraq's infrastructure failed to halt exports from its southern terminals today while militant Shiite cleric Muqtada al-Sadr urged his followers to end fighting against U.S. and Iraqi forces following last week's brokered peace agreement in Najaf, according to media reports.

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Violence in Iraq, including persistent sabotage attacks on pipelines and other facilities, has periodically shut down or slowed exports from the country and become a daily factor in the market's supply-and-demand equation.

Traders also have focused on Russia, where uncertainty has surrounded the outcome of the high-stakes tax battle between the government and Russian oil giant


-- a tug-of-war drama that has sparked frequent concerns for its potential to slow exports.

The enormous rally in the first three weeks of August, when prices rose some 20%, followed a brief correction after their previous June high as the Organization of Petroleum Exporting Countries increased its official production level by some 2.5 million barrels a day. OPEC Monday said it would increase production even further in the coming months, according to media reports.