Oil fell to a 3-month low today, hitting $111/barrel, while the U.S. dollar continued its five-week gain. OPEC apparently believes oil is within striking distance of $100/barrel, with projections showing world demand for the resource continuing to drop.

Crude fell after the dollar gained strength against the euro on U.S. data showing that industrial output rose more than expected in July. The 15-nation euro has lost some of its luster compared to its American rival amid growing evidence that European economies are slowing. The euro bought $1.4672 in trading Friday, down from $1.4811 late Thursday.

A rising dollar typically pushes oil prices lower as investors who buy crude and other commodities as hedges against inflation start dumping their positions to cut their losses. A stronger greenback also makes dollar-denominated commodities more expensive to overseas buyers, further eroding demand.

“The dollar is on fire again so that’s causing people to re-evaluate everything,” said Phil Flynn, oil analyst at Alaron Trading Corp. in Chicago. “It means oil prices could fall dramatically. We could see prices get to double digits if this continues.”

Demand growth next month will be the lowest since 2002.