Oil steady near $108

By Felicia Loo

SINGAPORE (Reuters) - Oil prices were little changed near $108 on Friday after falling nearly 8 percent this week as traders shed commodities positions to join a dollar rally and on signs that $100-plus prices were crippling demand.

Concerns about the health of the U.S. economy overshadowed an unexpected drop in weekly U.S. crude oil stocks, with a deeper draw expected this week as the industry registers the effects of Hurricane Gustav, which shut down Gulf refineries and oilfields.

U.S. crude for October delivery dipped 19 cents to $107.70 a barrel by 0543 GMT. The contract fell on Thursday to settle at $107.89 a barrel, its lowest since April 4.

London Brent crude steadied at $106.30 a barrel, having lost $1.76 a day ago.

"Continuing worries about the international economic outlook, a firmer U.S. dollar, and, possibly, market speculation that OPEC may not move production levels following next week's OPEC meeting left oil prices softer," David Moore, commodity strategist from Commonwealth Bank of Australia, said in a note.

The U.S. dollar rallied to its highest against the euro in 10 months on Thursday, while the European currency staged its biggest one-day drop against the yen in a decade as investors fled risk, with financial sector concerns the underlying theme. nT163129

The dollar fell versus the yen on Friday as investors unwound their risky carry trades, spooked by a 3 percent slump on major U.S. stock indices a day ago and a subsequent fall in Asia. .N

Traders also awaited fresh U.S. economic indicators, including the unemployment data, expected to show tens of thousands more Americans likely lost their jobs last month.