Oil eases below $81 in Asia

Oil fell below $81 a barrel on Monday, extending Friday's losses, pressured by a stronger dollar and weak US consumer confidence data that fanned worries about flagging demand in the world's top energy user. The dollar rose broadly on Monday as investors took refuge in its safe-haven status after fears of more liquidity tightening measures by China's central bank pummelled Asian stocks.
The market will scour US February industrial output data, due later, for further clues to the health of the world's largest economy, and a statement from the Federal Reserve at the end of its two-day interest rate-setting meeting on Wednesday, for evidence the recovery is still on track. By 0630 GMT, US crude for April delivery had fallen 51 cents to $80.73 per barrel, after settling at $81.24 on Friday. London Brent crude was down 49 cents at $78.90.
US consumer sentiment declined slightly in early March, with Americans less positive about the job outlook, a survey released on Friday showed. But February retail sales rose unexpectedly, despite heavy snow storms that were thought to have kept shoppers at home and bolstered hopes of a sustainable economic recovery. At 1315 GMT, the Federal Reserve will unveil industrial output and capacity utilisation data for February.
Economists expect a 0.1 percent fall in production and capacity usage of 72.6 percent, compared with January's rise of 0.9 percent in production and a capacity usage of 72.6 percent. The Fed is expected to hold benchmark rates near zero and reiterate its pledge to keep them low for an "extended period", due to lingering weakness in the US jobs market and nagging doubts over the solidity of the economic rebound.
But since US consumers are buying more and companies appear to be on the verge of hiring again, policymakers in the Fed may ponder on how long to keep its ultra-low rate pledge. Shares in Australia, Shanghai and Hong Kong fell on Monday, on concerns that Beijing may continue to tighten liquidity to fight higher-than-expected inflation.
China's central bank is seen raising banks' reserve requirement ratios as early as this week, while some say it may wait a while before raising benchmark deposit and lending rates. On the supply front, the market will also eye the outcome of Opec's meeting later this week.
The Organisation of the Petroleum Exporting Countries, which pumps at least one in every three barrels of oil, meets in Vienna on Wednesday to discuss production policy. Officials have said they do not expect a change in targets while prices are within their desired range. Opec has restricted output since the onset of the financial crisis in a bid to support prices.