* Chinese diesel demand still weak
* Equities slip in Asia and Europe
* U.S. dollar edges up
(Updates prices, recasts, previous dateline PERTH)
By David Sheppard
LONDON, Sept 21 (Reuters) - Oil fell below $71 a barrel on
Monday as growing concerns about the pace of economic recovery
added to ongoing signs of weak fuel demand.
U.S. crude for October delivery <CLc1> was down $1.06 to
$70.98 a barrel by 0858 GMT. London Brent crude <LCOc1> fell
$1.30 to $70.02 a barrel.
Oil prices have more than doubled since hitting lows near
$30 a barrel at the height of the global economic crisis, but
the market has come under pressure since touching a year high of
$75 a barrel almost a month ago.
"The market is a little nervous after the slide on the
Shanghai stock market," said Michelle Kwek, an analyst at
Informa Global Markets in Singapore.
"Risk appetite is down and that's prompting traders to take
profit in oil and other commodities."
Oil prices have followed moves in equity markets in recent
months as traders try to gauge the timing of a pick-up in global
energy demand expected to coincide with the world's emergence
from the largest economic crisis since the 1930s.
Shares in Asian and European stocks eased on Monday, pulling
further away from year highs hit last week, as investors worried
prices may have raced too far ahead of economic fundamentals.
The Shanghai Composite Index <>, China's key stock
index, extended the previous session's decline and fell as much
as 3 percent on Monday. []
Widespread concerns about the strength of energy demand were
also highlighted on Monday after the chief of Sinopec Corp
<0386HK.>, Asia's top oil refiner, said diesel demand remained
depressed in China, the world's second largest oil consumer.
The Chinese oil major's fuel sales have been broadly below
the level of 2008 so far this year, despite some arguing
economic growth in parts of Asia would bolster global energy
demand. []
FACTS Energy Group said in a report on Friday it expected
Asia's oil demand to revert to positive growth of around 340,000
barrels per day (bpd) in 2010, after five quarters of negative
growth, and China and India will be the key drivers.
"Asian petroleum demand is expected to grow at around
885,000 bpd in 2010, on the back of a recovery in the regional
economy compared to a weak 2009 baseline," FACTS' Lim Jit Yang
said in the report.
"As a result, this growth will exceed our baseline regional
growth expectation of some 600,000-800,000 bpd during 'normal'
times."
LOWER RISK?
Lower risk appetite amongst investors also lent support to
the dollar on Monday, which extended a bounce seen late last
week as traders covered short positions ahead of a Federal
Reserve monetary policy meet and a Group of 20 Summit this week.
[]
The dollar's slump to a one-year low agains the euro last
week had boosted dollar-priced commodities such as oil and gold
as they became cheaper for holders of other currencies.
Money managers boosted net long positions in the NYMEX crude
oil market last week in a bet prices would rise, the Commodity
Futures Trading Commission said in a report on Friday.
[]
(Additional reporting by Fayen Wong in Perth; editing by
William Hardy)
