Oil prices
fell in Asian trade on Monday, wiping out some of the gains of the previous
session amid worries lower growth targets in China could cut oil demand and
ongoing
concern over Russia's compliance with a global deal to cut oil output.
But worries
over escalating violence in the Middle East put a floor under prices.
Brent crude
futures dropped 29 cents, or 0.5 percent, to $55.61 a barrel as of 0638 GMT
after settling 1.5 percent higher in the previous session.
U.S. West
Texas Intermediate (WTI) crude futures fell 30 cents, or 0.6 percent, to $53.03
a barrel after closing the previous session up 1.4 percent.
"The main
drag affecting markets today is the lowering of growth targets by China and
tighter regulatory controls which implies less demand for oil and commodities
in general," said Jeffrey Halley, senior market strategist at Oanda
brokerage in Singapore.
China aims to
expand its economy by around 6.5 percent this year, Premier Li Keqiang said in
his work report at the opening of the annual meeting of parliament on Sunday.
That is lower
than the 6.7 percent growth achieved last year.
China also
plans to cut steel and coal output this year in an effort to tackle pollution,
its top economic planner said on Sunday, while China's newly appointed banking
regulator vowed on to strengthen supervision of the lending sector.
Meanwhile,
figures by Russia's energy ministry released last week showed February oil
output was unchanged from January at 11.11 million barrels per day (bpd),
casting doubt on Russia's moves to rein in output as part of a pact with oil
producers last year.
That came as
oil prices rose on Friday as the dollar weakened modestly after a speech by
U.S. Federal Reserve Chair Janet Yellen, which suggested a rate increase would
come at the end of its two-day meeting on March 15.
A weaker
dollar bolsters commodity prices, including oil. While a rate hike would be
supportive for the U.S. dollar, analysts said a near-term hike was already
largely priced in.
Crude oil
prices were also supported by news of increasing supply disruptions in the
Middle East, ANZ said in a note on Monday.
That followed
new doubts over Libya's attempts to revive its oil production after an armed
faction entered two major oil ports on Friday, pushing back forces that
captured and reopened the terminals in September.
"I'm
surprised prices haven't moved higher given events in the Middle East over the
weekend. China and U.S. interest rates are the bigger issues," Halley
added.
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