Oil fell to a new five-month low on Tuesday as expectations Opec would leave formal output targets steady outweighed concerns over the threat of Hurricane Ike to US Gulf of Mexico energy infrastructure.

Opec ministers meeting in Vienna were expected to keep output targets steady with calls from some to trim excess supply above agreed limits, about 790,000 barrels per day (bpd) according to some estimates.

Officials said oil prices -- which have tumbled nearly 30 percent from record highs over $147 a barrel in July -- are now more reflective of fundamentals.

'I think everything is in balance -- inventories are in a healthy position,' said Ali Al-Naimi, oil minister for Saudi Arabia, the world's top exporter.

US crude fell $1.57 to $104.77 by 1222 GMT after hitting a fresh five-month low of $104.23 a barrel earlier. London Brent crude traded down $1.30 to $102.14.

'Opec leaving quotas unchanged is a little dissapointing for the market,' said UBS oil strategist Thomas Stenvoll.

Traders are keeping a close eye on Hurricane Ike, which swept toward western Cuba as a Catagory 1 storm early on Tuesday and is expected to strengthen as it aims for the Gulf of Mexico, home to a quarter of U.S. oil production and 15 percent of natural gas output.

Energy companies -- still recovering from Hurricane Gustav last week -- began shutting production as Ike approached. - Reuters