Crude Oil Hit Four-Week Low

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

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

Yukos

-- 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.