LONDON: Brent crude oil fell to around $111 per barrel on Monday on concerns THAT slower economic growth would curb oil demand, but supply worries stemming from tension in the Middle East helped check losses.
The World Bank on Monday cut its economic growth forecasts for East Asia and the Pacific region, home to two of the world's largest oil consumers, and said there was a risk the slowdown in China could be deeper and more prolonged than expected.
China has been a prop for the world economy and global energy demand at a time of slower growth or recession for many developed nations.
Concerns about Europe persisted, with a fall in industrial orders for Germany, the region's largest economy, while a firm dollar after a surprise drop in the US jobless rate also curbed oil prices.
A stronger dollar makes commodities priced in the US currency more expensive for many end-consumers.
Brent crude for November fell to $110.54, down $1.48, before recovering slightly to around $111.20 by 1220 GMT. US crude fell $1.67 to a low of $88.21.
"The situation in China remains fairly uncertain as the World Bank cut its growth forecast for East Asia, raising serious concerns about a slowdown in global oil demand," said Myrto Sokou, a senior research analyst at Sucden Financial.
The World Bank said the new forecasts marked the slowest growth rate in the Asia Pacific region since 2001, even slower than the peak of the financial crisis in 2009.
"It's probably China that holds the keys to all this," said Christopher Bellew, a broker at Jefferies Bache. "This certainly could have caused the retrace downwards today."
MIDEAST TENSIONS
Oil continued to draw support from worries about potential threats to supply as the Syrian civil conflict drags on and as Iran's dispute with the West over its nuclear programme persists.
Brent crude speculators increased their bets on higher oil prices, raising their net long positions by 6,422 contracts to 113,549 in the week to Oct. 2, data published by the IntercontinentalExchange (ICE) showed on Monday.
Turkey returned fire for a fifth day against incoming bombardment from northern Syria. The exchanges are the most serious cross-border violence in Syria's conflict and highlight how the crisis could destabilise the region.
"The ongoing shelling of Turkey by Syria is also fuelling concerns about the conflict in Syria spreading to the neighbouring country," said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt.
"If this were to happen, oil production in the North of Iraq would be at risk, since the oil is transported to the West via pipelines through Turkey," he said.
The United States and Europe are looking at more economic sanctions to pressure Iran to abandon its nuclear programme.
Middle East conflicts and delays in the October loading of North Sea Forties cargoes have pushed Brent's premium to US crude to its highest since October 2011.
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