* U.S. bank proposals knock oil lower
* Breaks below $75 a barrel support level
* Falling U.S. and European shares weigh
(Recasts, updates prices, market activity)
By Edward McAllister
NEW YORK, Jan 22 (Reuters) - Oil fell toward $75 a barrel
on Friday as equity markets slumped and commodities remained
under pressure from U.S. President Barack Obama's proposed
tightening of bank trading rules. [] []
Obama's proposals to cut proprietary trading raised the
possibility of banks and funds reevaluating their involvement
in the commodities sector, where they have boosted their
presence heavily. [] []
Energy markets also remained concerned that China's move
this week to restrain credit and cool economic growth will curb
oil demand.
U.S. crude <CLc1> fell $1.05 to $75.03 a barrel at 2:00 EST
(1900 GMT). Crude fell as low as $74.58, its lowest since Dec.
23.
ICE Brent crude <LCOc1> fell $1.26 at $73.32 after touching
a session low of $72.87.
"Traders were selling in response to a number of factors:
Chinese credit tightening, (proposed) sweeping new U.S. banking
and trading changes and this week's DOE snapshot of demand were
all seen as bearish factors," said Peter Beutel, president of
Cameron Hanover in New Canaan, Connecticut.
The U.S. Energy Information Administration's inventory
report on Thursday showed that while crude inventories fell
slightly last week, gasoline stockpiles were up sharply and
refinery utilization dived. []
Investors have looked to wider economic data over the past
year for signs of economic recovery and a potential rebound in
energy demand.
On Friday, Wall Street fell as the bank restrictions
overshadowed solid earnings from General Electric and
McDonald's. []
BANK RESTRICTIONS
The full implications of Obama's proposals had yet to play
out, analysts said.
"The potential consequences are huge, and the continued
strength and liquidity of markets will depend on how
effectively the banks and their employees are able to to
reorganize and adjust to the new regime, if and when it comes
into force," leading oil brokerage PVM said in a note.
"If you're an oil trader working for a bank, Obama's plan
is not going to help your career."
Oil prices rose to 15-month highs near $84 a barrel in
early January, partly due to an influx of money following a
hike in fund allocations. []
"Potentially, some funds will need to revise their exposure
for the second half of the year," said Petromatrix analyst
Olivier Jakob, referring to both Obama's plan and the package
of proposals unveiled last week by the U.S. futures regulator,
the Commodity Futures Trading Commission.
"For now, it will weigh on sentiment in a global sense,"
said Jakob.
<--------------------------------------------------------------
Click here for a graphic showing the impact of Obama's
proposals on commodity markets so far:
http://graphics.thomsonreuters.com/0110/CMD_OBPRC0110.gif
For a related analysis on the implications of the Obama
proposals see here: []
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CHINA GROWTH
Concerns that oil-consuming nations could take steps to
temper growth may also weigh on prices, analysts said. The
world's No. 2 oil consumer China reported fourth-quarter growth
of 10.7 percent on Thursday, its first double-digit figure
since 2008. []
"Any efforts by the Chinese government to slow the economy
would affect demand for raw materials," said Serene Lim, a
Singapore-based oil analyst at ANZ.
(Additional reporting by Gene Ramos and Robert Gibbons in New
York, Emma Farge in London and Alejandro Barbajosa in
Singapore; Editing by David Gregorio)
