Prices were also under pressure from indications suggesting economic growth in the United States, the world's biggest energy user, would slow, they said.

At 2:55 pm (0655 GMT), New York's main contract, light sweet crude for delivery in September fell 21 cents to 75.25 dollars a barrel from its close of 75.46 dollars in the United States Thursday.

Brent North Sea crude for September delivery was down 15 cents to 76.41 dollars.

A report from the Institute for Supply Management (ISM) said the US economy's pivotal services sector weakened in July as the ISM index slipped to 54.8 percent from 57.0 percent in June. Services make up the lion's share of activity in the world's biggest economy.

That was less than Wall Street's consensus target of 56.5 percent.

"The data showed faster than expected decline in the outlook for expansion," said Dariusz Kowalczyk, an investment strategist with CFC Seymour Securities in Hong Kong.

"That is why commodities including energy were beaten today," he said.

On Wednesday, the New York contract had fallen 35 cents to close at 75.46 dollars on easing concerns tropical storm Chris could gain strength and hit vital oil production facilities and refineries in the US Gulf Coast.

The National Hurricane Center in Miami said the storm had weakened north of Puerto Rico, and was on the verge of being downgraded to a tropical depression.

Last year's record-breaking Atlantic season saw 28 named storms, including 15 that became hurricanes.

Barclays Capital analyst Kevin Norrish credited the weakening of Tropical Storm Chris for weakening prices "and also as momentum appears to be building for concerted action on the part of the US, France and Britain to back a truce in southern Lebanon".

French Foreign Minister Philippe Douste-Blazy said on BBC television Thursday he believes "more than ever" a durable ceasefire between Lebanon's Hezbollah and Israel will be in place soon.

"We are working day and night so that a durable ceasefire can take place as soon as possible. I believe it, I believe it more than ever after my trip to the Near East, after coming back from Beirut two days ago," he said.

He declined to give a date for a truce as Paris and Washington worked to narrow their differences at the United Nations over how to achieve a ceasefire in Lebanon.

OIL MAY TOUCH $100: IRAN
Another report from New Delhi adds: Oil cartel Opec's second-largest producer Iran said Friday crude oil prices may touch 100 dollars a barrel on winter demand and geopolitical concerns, according to a report.

"There is still a possibility of crude reaching 100 dollars a barrel due to geopolitical problems worldwide and peaking of winter demand," Iran's Deputy Oil Minister Hadi Nejad Hosseinian said, according to the Press Trust of India.

Asked by reporters if Iran would stop oil exports in the event of an attack by the United States over its suspected nuclear programme, Hosseinian replied, "I don't think so."

The deputy oil minister was in New Delhi for a meeting with Indian and Pakistan officials aimed at trying o break a deadlock over pricing of gas proposed to be imported by New Delhi and Islamabad through a seven-billion-dollar tri-nation pipeline.