Oil extends decline towards $72, worries over demand

                                
   * Worries about global recovery, euro zone weigh on markets
                                
 * China Jan official PMI posts first dip in 8 months
                                
 * White House to paint grim fiscal picture - source
                                
 By Fayen Wong
                                
 PERTH, Feb 1 (Reuters) - Oil prices fell on Monday,
extending January's worst loss in 13 months on concerns about
global growth and sluggish oil demand.
                                
 Oil prices ended January down more than 8 percent,
pressured by data showing tepid energy in the United States,
worries about fiscal turmoil in smaller euro zone countries and
a stronger U.S. dollar.
                                
 U.S. crude for March delivery <CLc1> fell 36 cents to
$72.53 a barrel by 0239 GMT. The contract fell 75 cents to
settle at $72.89 a barrel on Friday, after sliding to a
five-week low of $72.43.
                                
 London Brent crude <LCOc1> fell 33 cents to $71.13.
                                
 "The cold weather premium is coming off and investors have
to consider the pace of global economic recovery, actual oil
demand and a strengthening U.S. dollar," said Benson Wang, an
oil trader at Commodity Broking Services in Sydney.
                                
 "Looking at how crude oil prices have collapsed in the last
1-2 hours of trading in the past few sessions, I think it shows
a trend whereby investors are trying to get out of their long
positions."
                                
 Money managers cut their net long crude oil futures
position on the New York Mercantile Exchange in the week
through Jan. 26, the Commodity Futures Trading Commission said
on Friday. [ID:nN29139202]
                                
 Official data that showed China's Purchasing Managers'
Index falling to 55.8 in January from 56.6 in December, the
first month-on-month deterioration since May 2009, also weighed
on sentiment.
                                
 Analysts said there is a persistent worry that China would
further tighten monetary policy.
                                
 Beijing's moves last month to rein in rapid growth and curb
inflationary pressures have sparked fears that such measures
could impede a still-weak global economic recovery and curb
Chinese demand for energy and commodities.
                                
 Adding to the gloom, the White House will predict a $1.6
trillion U.S. budget deficit in the 2010 fiscal year, a fresh
record and the biggest since World War Two as a share of the
economy, a congressional source told Reuters on Sunday.
[ID:nN31153033]
                                
 The grim forecast adds to the challenges facing President
Barack Obama, who is emphasizing a message of fiscal discipline
but is also seeking stimulus measures to boost the struggling
economy in the near term.
                                
 Markets are bracing for a big week of economic news, with a
number of major central bank meetings across the world and a
raft of economic reports out of the United States, culminating
in non-farm payrolls data on Friday. [ID:nN29208716].
                                
 Asian stocks slid on Monday after suffering their worst
monthly drop in a year, while the U.S. dollar gathered steam,
as fiscal worries in the euro zone prompted investors to add to
short positions in the single currency. [MKTS/GLOB]
                                
 Royal Dutch Shell <RDSa.L> has shut down three oil flow
stations in Nigeria's Niger Delta after a key crude oil
pipeline was sabotaged, a company spokeswoman said on Sunday.
[ID:nLDE60U0KC]
 (Editing by Michael Urquhart)