I will start off by saying that I am new to playing games on a PC. I have always played Oblivion on an Xbox 360, but recently I decided to purchase a laptop for several games that I have wanted to play on the PC. I did a lot of research and many people suggested the Asus G73. I bought the laptop about a week ago and it plays WoW flawlessly at the highest settings in high populated areas. When trying to play Oblivion, however, I have experienced terrible issues with draw distance. The draw distance is set to the highest settings. When I exited the sewers for the first time, the draw distance was very good. Over the course of about a minute, the draw distance kept getting worse until I could only see about thirty yards in front of me. Is there any way to fix this issue? Any help will be greatly appreciated. Here are my specs:

Asus G73jh

Intel? Core? i7-740QM processor
Windows 7 64-bit
6GB DDR3 memory
640GB Serial ATA hard drive (5400 rpm)
ATI Mobility Radeon HD 5870 graphics

Since this is the first time you are playing are you sure that it is not just the weather that has changed to a foggy\rainy day ?? - the game does have differing weather conditions that are at times very hard to see far in the distance and it might just be one of those days -- the draw distance normally will not change without you adjusing the settings so if it was fine when you first left the sewer chances are it is just a new weather rolling in.

I have played Oblivion for years on the Xbox 360, so I have seen all of the weather patterns. It's almost like a heavy grey fog heading towards my way, but I have never seen weather like that on the 360. I bought tthe GOTY edition yesterday for the PC to take advantage of the mods now that I have a good PC to play on.

To make sure try using the console to force clear weather ( open console with the ~ key and type in FW 38eee and hit return that will force the weather to clear and if it clears up then you'll know it was the weather.