* Stronger greenback drags on oil benchmarks
* Doubts over U.S., China demand growth also hurt
By Luke Pachymuthu
SINGAPORE, June 24 (Reuters) – Brent crude futures traded
below $101 a barrel on Monday, hurt by a stronger dollar and
concerns over slower growth in demand for oil in the United
States and China.
The European benchmark dropped nearly 5 percent last week in
its biggest weekly drop since early April, after Federal Reserve
Chairman Ben Bernanke laid out a strategy for paring back
monetary stimulus, broadly sapping demand for commodities.
The step by the U.S. central bank also lifted the dollar,
making it more expensive for holders of other currencies to buy
greenback-denominated oil.
Against a basket of major currencies, the dollar index
rose 0.31 percent to a two-week high after ending last
week up 2.2 percent in its largest weekly gain since November,
2011.
Brent crude was down 25 cents at $100.66 a barrel by
0241 GMT on Monday, while U.S. oil dropped 9 cents to
$93.60 a barrel.
“Global money supply will be wound back and the level of
investment in commodities like oil will be pulled back,” said
Michael McCarthy, chief market strategist at CMC Markets in
Sydney.
“In the long term the cessation of that huge stimulus is
going to pressure commodity markets.”
A dimming outlook for oil demand growth in China, the
world’s second-largest economy, also dragged on prices.
Manufacturing activity dipped to a nine-month low in June
raising fears the country could miss its growth target of 7.5
percent for this year.
“Policymakers in China are unlikely to be injecting more
stimulus into the economy at the moment as Beijing is looking to
rebalance the economy from one of consumption as opposed to an
economy reliant on exports,” said Lee Chen Hoay, investment
analyst at Singapore-based Phillip Futures.
“This is likely to have an impact on manufacturing activity
and as such oil demand is likely to be slightly hit. A further
downward revision of oil demand can be expected inside the
second half of the year.”
The International Energy Agency (IEA) revised its oil demand
growth forecast for China earlier this month to 3.8 percent from
3.9 percent.
(Reporting by Luke Pachymuthu; Editing by Joseph Radford)
