Crude oil futures fell Friday for the sixth straight session as production ramped up in the Gulf of Mexico in the wake of Hurricane Gustav, and U.S. unemployment hit a multi-year high.

Light, sweet crude for October delivery settled $1.66, or 1.5%, lower at $106.23 a barrel on the New York Mercantile Exchange, matching the settlement price on April 4. Oil last fell in six straight sessions in May 2007. Brent crude on the ICE futures exchange settled $2.21, or 2.1%, lower at $104.09 a barrel.

Oil prices extended a tailspin sparked by Gustav's failure to cause major damage to production in the Gulf of Mexico. The storm passed directly over some of the biggest offshore production platforms, but caused only minimal disruption to output. About 90.5% of oil production is still down, though several large producers have said they will restore output by next week. Futures have dropped 8% from the Aug. 29 settlement price, the final day of pit trading before Gustav hit.

As Gustav faded, the market turned back to weakening oil demand forecasts for the U.S. and Europe. In the latest of a long series of negative economic indicators, the U.S. unemployment rate hit 6.1% in August, the highest level in five years. Unemployment is closely tracked in the oil market, as many see a link between joblessness and a decline in gasoline usage as well as consumer spending.

European economies have only recently begun showing signs of deteriorating, where economists now see the U.S. as approaching a bottom, even if recovery may be months away. Europe's dim prognosis helped send the dollar close to a 10-month high against the euro, prompting some investors who trade in both currency and commodity markets to sell crude futures. The euro traded at $1.4256 Friday afternoon.

"What the market is doing right now is reassessing and discounting demand destruction that's being seen now in the euro zone, in Japan and potentially in the emerging market economies," said Brad Samples, an analyst at Summit Energy in Louisville, Ky.

The market will hit a bottom when the price of crude reaches the cost of finding and producing new oil fields, between $90 and $100 a barrel, he said.

Two new threats to supply could emerge next week, potentially halting oil's decline.

Hurricane Ike may enter the Gulf of Mexico on Wednesday, according to the National Hurricane Center, just 10 days after Gustav reached the region. While Gustav caused minor damage, Ike would pose a fresh threat to the Gulf's 1.3 million barrels a day of oil production.

The oil market must also contend with the Sept. 9 meeting of the Organization of Petroleum Exporting Countries in Vienna. The group is not expected to cut production outright, but could signal plans to do so later in the year.

"(OPEC) will indicate the need for 'increased compliance' with current quotas, signaling likely informal cuts this fall," wrote Greg Priddy, an analyst with the consultancy Eurasia Group in Washington, D.C.

Saudi Arabia increased production earlier this year, and could scale down exports "quietly and without fanfare" this fall, he said.

Front-month October reformulated gasoline blendstock, or RBOB, settled 5.43 cents, or 2%, lower at $2.6861 a gallon. October heating oil settled 4.09 cents, or 1.4%, lower at $2.9828 a gallon.

Copyright (c) 2008 Dow Jones & Company, Inc.