* Oil falls below $60, extends last week's 11 percent drop
* Japanese data positive but Asian markets stumble
* Analysts sees more correction for oil prices
(Releads, updates prices, adds Japanese data)
By Fayen Wong
PERTH, July 13 (Reuters) - Oil prices fell $1 to below $59
a barrel on Monday, extending last week's losses to languish at
a seven-week low, as lingering concerns about the pace of a
global economic recovery encouraged a further sell-off.
Oil prices dropped 11 percent last week in their biggest
weekly decline since late January amid mounting worries that a
economic rebound may not be coming soon to help spur flagging
fuel demand.
Crude oil for August delivery <CLc1> was down 79 cents at
$59.10 by 0706 GMT, after having earlier fallen by $1 to
$58.89. London Brent crude <LCOc1> fell 65 cents to $59.86.
"Economic concerns are continuing to weigh on oil prices.
The rally we saw last month was clearly overdone," said Daniel
Liu, an energy strategist at MF Global Singapore Pte Ltd.
"We believe oil prices will see a further correction to
fall to around $55, before it bounces up when confidence on the
global economy returns to the market."
Oil prices shot up 40 percent last quarter and touched an
eight-month high of above $73 a barrel, as investors shrugged
off weak fundamentals and banked on hopes of a swift global
economic recovery.
But a recent slew of bearish data around the globe, which
suggested that some of the world's largest economies were still
not out of the woods, has prompted a sell-off frenzy.
Oil fell on Monday despite data showing Japanese consumer
confidence improved in June and a measure of companies'
capacity utilisation rose for May, indicating the world's
third-largest energy consumer may be past the worst of its
deepest recession since World War two. []
Analysts said oil prices would continue to track equities
markets in the short term. And with Wall Street's rally
stalled, this week could be crunch time as big banks' earnings,
including Citigroup's <C.N>, roll in and investors scrutinise
reams of economic data for clues on the recovery.
[]
Key economic data from China, including gross domestic
production in the second quarter, industrial output and retail
sales, due to be released on Thursday, will also be keenly
watched by investors.
Analysts at BNP Baribas said oil prices could see more
corrections in the short term as external factors which have
helped oil's recent rally, including a weak U.S. dollar and
rising equities, are set to reverse course.
"Focus will shift back to oil fundamentals which remain
weak -- oil demand will contract with the world economy, and
OPEC has a large inventory hurdle to overcome," BNP's Harry
Tchilinguirian said in a report.
Investors have also been made cautious by U.S. government
moves to reign in speculation in energy and metals markets,
while the Commodity Futures Trading Commission could have new
regulations in place by late October.
[][]
Separately, an oil tank blew up at a chemical plant in
Urumqi, capital of northwest China's restive Xinjiang region,
on Sunday, but local police and refinery officials ruled out a
deliberate attack. []
In Nigeria, a top rebel leader is expected to be freed
early this week, his lawyer said on Sunday, but analysts doubt
his release will lead to a significant drop in militant attacks
in Africa's biggest oil sector. []
