* Oil's 10-day rise snapped after 15-month high
* China's central bank raises yield in bill auction
* Forecasts of sustained cold weather to underpin prices
(Updates prices, adds fresh quote, changes dateline from
previous LONDON)
NEW YORK, Jan 7 (Reuters) - Oil fell from 15-month highs to
below $83 a barrel on Thursday as signs of tighter monetary
policy in China sparked concerns about demand growth in the
world's second-largest energy consumer.
China's central bank surprised markets by raising the
interest rate in a three-month bill auction, which the markets
took as a signal of policy tightening, putting pressure on
commodities and clipping 10 straight days of gains for oil.
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China triggers sell-off: http://link.reuters.com/vys32h
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China's rapidly expanding economy and its burgeoning thirst
for oil has been seen as one of the main reasons crude prices
have more than doubled in the past 12 months, despite the
lingering impact of the economic crisis.
U.S. crude for February delivery <CLc1> fell 45 cents to
$82.73 a barrel by 11:35 a.m. EST (1635 GMT), off Wednesday's
15-month high of $83.52. London Brent crude <LCOc1> fell 45
cents to $81.44 a barrel.
"Crude oil edged lower on speculation that China's move to
slow bank lending may reduce commodity demand in the country,"
Addison Armstrong, analyst at Tradition Energy in Stamford,
Connecticut, said in a note.
Crude had shrugged off news of higher U.S. oil inventories
on Wednesday to post its 10th straight session of gains,
extending a near $11 rally on expectations freezing
temperatures across much of the United States would eventually
cut into bulging stocks.
Arctic winds have pushed down into the Northern Hemisphere,
freezing Europe and parts of Asia, and boosting demand for
heating in the United States by some 21 percent above normal.
European energy demand has also surged, especially in
Britain and France, while heavy snow and record low
temperatures in China prompted cities across eastern and
central parts of the country to begin rationing power.
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Analysts said investment flows from funds at the beginning
of the new year were also likely to be responsible for part of
the recent rise in prices.
"We still fail to see any compelling fundamental reason why
crude oil prices are where they are. The weather is cold, but
it was also cold at this time last year when prices plunged to
$33 a barrel," MF Global analyst Edward Meir said.
"We suspect a more logical reason for the rally has to do
with the fact that, egged on by a struggling dollar and a
benign interest rate environment, money is flowing into
commodities at a heady pace."
U.S. RECOVERY
The number of U.S. workers filing new applications for
unemployment insurance rose less than expected last week, the
Labor Department said on Thursday.
Monthly non-farm payrolls data on Friday will give further
indication of the pace of recovery in the world's largest
energy consumer. James Bullard of the St. Louis Federal Reserve
Bank said the economy is close to the point where unemployment
will start to fall. []
Oil markets have been looking to wider economic data for
positive signs that could boost energy demand.
Price support also came from the continuing talks between
Belarus and Russia over the supply of Russian oil for 2010.
Belarus has insisted Russia should continue billions of
dollars in oil subsidies, complicating talks aimed at resolving
a dispute over a pipeline that brings 10 percent of Europe's
crude. Russia's energy minister said talks were continuing on
Thursday. []
(Reporting by Matthew Robinson, Robert Gibbons and Gene
Ramos)
(Additional reporting by Jennifer Tan in Singapore; Editing by
Lisa Shumaker)
