* U.S. refinery activity drops
* China beats 2009 growth target after strong Q4
* Obama proposal to limit bank trading may hurt commodities
(Updates prices and details throughout, changes dateline and byline.)
By Joshua Schneyer
NEW YORK, Jan 21 (Reuters) - Crude oil fell almost $2 to below $76 a
barrel for the first time this year, as government data showing a sharp
drop in U.S. refining activity to nearly its lowest level in 25 years
indicated weak demand for fuels.
The U.S. Department of Energy reported Thursday that U.S. refineries
scaled back utilization rates by 2.9 percentage points to 78.4 percent last
week. Barring occasional periods of hurricane-related refinery outages, the
rate was the lowest since the 1980s, according to DOE data.
"Consumer demand is weak, and it all starts from there," said Tim
Evans, energy analyst at Citi Futures Perspective in New York.
U.S. crude oil inventories dipped by 400,000 barrels to 330.6 million
barrels last week in the world's largest energy consumer, the DOE said, but
the small unexpected crude draw was overshadowed by the fall in refinery
rates, suggesting a fuel demand slump has continued. []
"Until we get refinery rates up, it looks like crude oil demand is just
lackluster," said OptionsExpress analyst Mike Zarembski said.
U.S. crude oil for March delivery <CLc1>, the new front-month contract,
fell $1.80 to $75.94 a barrel by 1:49 p.m. EST (1849 GMT). Prices have slid
sharply since crude hit a 15-month high of $83.95 on Jan. 11.
London Brent crude <LCOc1> lost $1.87 to $74.45 per barrel.
Oil traders shrugged off last week's draw in U.S distillate stocks,
which include diesel and heating oil. Distillates declined by 3.3 million
barrels to 157.1 million barrels, while gasoline inventories rose by 3.9
million barrels to 227.4 million barrels.
OBAMA PROPOSAL, STRONG DOLLAR DENTS COMMODITIES
A proposal by U.S. President Barack Obama on Thursday to cut
proprietary trading at large banks that took U.S. government bailouts over
the last 18 months also led to selling of commodities like oil.
Analysts said that big banks, which often invest tens of millions of
dollars of their own funds daily into commodities markets, could see their
trading volumes reduced if the proposal is enacted. []
U.S. equities also fell Thursday, and the dollar's jump to a five-month
high against the euro also pressured commodities. Commodities priced in the
greenback tend to fall as the dollar rises as they become more expensive
for holders of other currencies. []
Prices were also weighed down by concerns China will take further
measures to temper its booming economy after it posted double-digit growth
in the fourth quarterfor the first time since 2008. []
China's annual gross domestic product growth accelerated in the fourth
quarter to 10.7 percent -- the fastest in two years -- from a revised 9.1
percent in the third, the National Bureau of Statistics (NBS) said
Thursday. []
For all of 2009, China grew 8.7 percent.
http://graphics.thomsonreuters.com/0110/CN_GDP0110.gif
"Investors will soon have to assess whether this report -- and others
like it -- will be strong enough to allow the commodity rally to continue
without alarming the authorities even further," MF Global analyst Edward
Meir said.
Prices are 47 percent below their July 2008 record high near $150, but
have more than doubled from lows near $32 reached by the end of that year.
(Additional reporting by David Sheppard in London and Alejandro Barbajosa
in Singapore; Editing by John Picinich)
