* China unexpectedly cuts interest rates
* Bernanke testimony: few clues for more easing
(Adds quote, adds background, updates prices)
By Matthew Robinson and Robert Gibbons
NEW YORK, June 7 (Reuters) – Oil fell on Thursday as
comments from U.S. Federal Reserve Chairman Ben Bernanke dimmed
hopes for additional stimulus measures and offset support from a
surprise interest rate cut by China.
Crude prices shot higher in early trade on expectations the
first rate cut by China since the depths of the global financial
crisis would boost demand in the world’s second largest oil
consumer.
Prices later slid following Bernanke’s testimony to Congress
that offered little encouragement to investors who were hoping
the Fed would launch a third round of bond buys, or quantitative
easing.
“With China cutting interest rates that was a form of QE3,
but Bernanke only threw out a tease and crude prices pulled
back,” said Dan Flynn, analyst at Price Futures Group in
Chicago.
Past stimulus moves have sent investors into riskier asset
classes such as commodities, pushing up prices. Financial
markets have been closely watching for any signs of fresh policy
steps to bolster the struggling economy. Gold prices dropped 2
percent while equities pared gains.
Brent crude traded down 40 cents to $100.24 a barrel
by 12:08 p.m. EDT (1608 GMT), having hit a high of $102.45 a
barrel.
U.S. crude traded down 13 cents to $84.89 a barrel,
off earlier highs of $87.03. U.S. gasoline and heating oil
futures also dipped, dragged down by the wider oil complex and
ongoing weak demand.
After a string of supply disruptions and worries about the
loss of Iranian oil due to Western sanctions pushed Brent to
2012 highs over $128 a barrel in early March, concerns about the
global economy and the euro zone crisis have sent crude prices
tumbling.
Brent dipped below $100 a barrel last week for the first
time since October 2011, and both contracts have been below 30
on the 14-day relative strength index — typically a technical
sign indicating a commodity has been oversold — since mid-May.
(Reporting by Matthew Robinson and Robert Gibbons in New York;
Manash Goswami in Singapore and Ikuko Kurahone in London;
Editing by David Gregorio and Bob Burgdorfer)
