* Worry China to hike rates to brake economy pressures oil
* Dollar strengthens, also weighing on oil
* Coming up: API oil stocks data at 4:30 p.m. EST Tuesday
(Recasts, updates prices and market activity, new byline
and changes dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Nov 16 (Reuters) - Oil slumped 3 percent on
Tuesday, falling for a third straight session due to the
stronger dollar, mounting concerns about the prospect of
tighter monetary policy in China and euro zone debt and
economic woes.
Oil's slump also came ahead of weekly oil inventory reports
expected to show U.S. crude stockpiles rose last week. []
The dollar index rose to its highest level since late
September and the greenback reached a six-week high against the
euro as investors cut exposure to commodities and risk amid
concerns about Ireland and other euro zone economies. []
China's key stock index fell by 4 percent as investors
dumped large cap bank and energy shares amid rumors of more
aggressive action to control inflation. []
U.S. crude for December delivery <CLc1> fell $2.43, or 2.86
percent, to $82.43 a barrel at 12:32 p.m. EST (1732 GMT).
In London, ICE front-month January Brent crude <LCOc1> fell
$1.94 to $84.82 a barrel.
"The prospect of further monetary tightening in China is
worrying for all commodities," said Carsten Fritsch, analyst at
Commerzbank in Frankfurt. "So far, Chinese oil demand has been
robust, but there are concerns that it could be seriously
affected by higher rates, for example."
U.S. stocks declined, with the Nasdaq falling about 2
percent as investors dumped resources and technology shares
amid the concerns about China and Ireland. []
Gold fell a third successive day to its lowest in two weeks
as the stronger dollar kept commodities under pressure and
offset the usual lift bullion would receive from concern over
the Irish debt crisis.
A stronger dollar can pressure oil prices by attracting
investors to foreign exchange markets seeking higher yields,
increasing the value of greenbacks paid to oil producers and
making oil more expensive for users of other currencies.
The Reuters-Jefferies CRB index <.CRB>, a global
commodities benchmark, hit three-week lows on Tuesday as
commodity prices plunged in a second major sell-off in three
days as the dollar surged. []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic of the performance this year of commodities in
CRB index: http://link.reuters.com/kew48n
Graphic of crude-euro correlation:
http://link.reuters.com/myf75q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
"There was just too much speculative length in crude and
this is being bled out of the market right now. There's worry
about euro zone debt and whether China will raise its interest
rate," said Andy Lebow, broker at MF Global in New York.
"A week ago, every trader thought $90 was the target, but
that's not how it looks right now."
Oil has retreated after hitting a 25-month peak above $88 a
barrel last Thursday, the highest prices since the midst of the
financial crisis.
As crude oil jumped last week, money managers increased
their net long positions to a record 189,002, as of Nov. 9,
CFTC data showed. []
The dollar has rebounded strongly over the last two weeks
as the impact of the Federal Reserve's quantitative easing has
pushed up U.S. bond yields.
Expectations about oil inventories provided no relief to
the price slip on Tuesday.
Ahead of weekly oil inventory reports, analysts surveyed by
Reuters expected data to show U.S. crude stockpiles rose last
week by 400,000 barrels, though distillate and gasoline stocks
were expected to have fallen, a Reuters poll showed. []
Industry group the American Petroleum Institute will issue
its latest inventory report at 4:30 p.m. EST (2130 GMT) on
Tuesday, followed by government data from the U.S. Energy
Information Administration on Wednesday morning.
(Additional reporting by Gene Ramos in New York and
Christopher Johnson in London; Editing by Lisa Shumaker)
