Oil tumbled below $75 a barrel today, approaching one-month lows, after higher reserve ratios for selected Chinese banks took effect, rekindling concern that tightening measures by the world's second-largest oil consumer would curb demand.
The Shanghai Composite Index fell more than 2 per cent, after China's central bank told the banks that needed to raise their reserve ratios to make the change today, banking sources said.
US oil fell 76 cents to $74.50 a barrel by 0444 GMT. On Friday, it touched a one-month intraday low of $74.01, retreating from a 15-month peak of $83.95 on January 11th. ICE London Brent declined 80 cents to $72.89.
Crude oil inventories rose in the United States last week as imports increased and refinery activity continued to falter, a preliminary Reuters poll of analysts showed yesterday ahead of weekly inventory reports.
US crude stockpiles were projected to have risen by 1.7 million barrels in the week to Jan. 22 after they posted an unexpected drawdown the week before, the poll of nine analysts showed.
The survey also showed gasoline stockpiles climbed 1.4 million barrels, even as refinery utilisation rates probably declined to 78.3 per cent of capacity, their lowest level outside a hurricane season in 25 years.
Industry group American Petroleum Institute will issue its weekly inventory report today at 9.30pm. Government data from the US Energy Information Administration (EIA) will follow tomorrow.
Distillate stocks, which include heating oil and diesel, were predicted down 1.4 million barrels, compared with a slump of 3.3 million barrels a weak earlier, as temperatures across the US Northeast rebounded to unseasonably high levels.
Recent economic reports have raised doubts over the strength of the recovery in the US housing and labour markets, and the Federal Reserves is not seen indicating that it will raise its benchmark rate any time soon when it meets this week.
The Federal Open Market Committee (FOMC), the Fed's policy-setting group, will begin a two-day policy meeting today.
Data yesterday showing a record drop in December used home sales cast doubt on the strength of a recent rebound in the housing sector.
About half of the crude oil spilled in a ship collision on Saturday on the Sabine-Neches Waterway leading to four refineries in Texas, was contained yesterday, and the key shipping waterway will likely reopen on Thursday, the US Coast Guard said.
Those four refineries account for about 6.5 per cent of US refining capacity.
Reuters