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UPDATE 1-Oil slips to $108, heads for second weekly drop

Alex Lawler
Friday, 26 Oct 2012 | 9:39 AM ET

* Brent falls as low as $107.40, demand outlook weighs

* Hurricane Sandy threatens U.S. after slamming Cuba

* Coming Up: U.S. GDP for third quarter; 1230 GMT

(Adds quote in paragraph 5, updates prices)

LONDON, Oct 26 (Reuters) - Oil fell on Friday to around $108 a barrel and was heading for its second weekly drop, pressured by expectations U.S. economic growth will not be strong enough to bolster the demand outlook and by Europe's debt crisis.

The world's biggest economy is likely to have grown at an annual rate of 1.9 percent in the third quarter, a Reuters poll showed, still short of the pace economists say is needed to make much of a dent in the unemployment rate.

Brent crude fell 58 cents to $107.91 a barrel by 0938 GMT, having fallen to as low as $107.40 earlier. It rose on Thursday after seven declines that marked its longest losing streak since July 2010.

U.S. oil slipped 72 cents to $85.33.

Oil has been dragged lower this week by rising U.S. inventories, poor earnings and Europe's financial crisis. Results from Apple and Amazon undershot expectations, while on the oil patch Norway's Statoil cut its 2013 output guidance.

``Commodities have come under renewed pressure,'' said Carsten Fritsch, analyst at Commerzbank in Frankfurt. ``The financial markets are clearly the dominant force at the moment rather than supply-side risks, of which there are still many.''

Brent was set to fall for a second week following last week's decline of nearly 4 percent, leaving prices little changed from the end of 2011. U.S. crude was heading for a weekly drop of around 5 percent.

While the demand outlook weighs on the market, supply-side problems have prevented a further decline for Brent. The European benchmark has gained support this week from production shutdowns in Nigeria and the North Sea.

Investors were keeping an eye on Hurricane Sandy, which swelled into a major threat to much of the U.S. East Coast on Thursday after lashing Cuba with heavy rains and high winds and swirling through the Bahamas.

The storm may force oil refineries in New Jersey and Pennsylvania to slow or shut some operations, hurting gasoline and heating oil on the east coast.

(Additional reporting by Manash Goswami; editing by Jason Neely and James Jukwey)