* Oil below $72, traders seek direction
* U.S. dollar broadly steady after rebound last week
(Recasts, updates prices, analyst's comments)
By Fayen Wong
PERTH, Sept 21 (Reuters) - Oil prices fell below $72 a
barrel in thin trading on Monday, pressured by easing Asian
stocks and comments by Asia's No. 1 refiner Sinopec <0386.HK>
that diesel demand China had not completely recovered.
U.S. crude for October delivery <CLc1> fell 40 cents to
$71.64 a barrel by 0540 GMT. The contract fell 43 cents to
settle at $72.04 a barrel on Friday.
London Brent crude <LCOc1> fell 41 cents to $70.91 a
barrel.
"The market is a little nervous after the slide on the
Shanghai stocks 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."
Asian stocks eased on Monday, pulling further away from
13-month highs hit last week, as investors worried prices may
have raced too far ahead of economic fundamentals, with shares
in China feeling supply pressures ahead of a string of IPOs.
The Shanghai Composite Index <>, China's key stock
index extended the previous session's decline and fell as much
as 3 percent on Monday, weighed by fresh signs the stock
regulator was pushing more shares, including those from a new
second board, into the market. []
Oil prices were also pressured by bearish comments from
Sinopec, Asia's top refiner and China's second-largest oil and
gas producer, that diesel demand in China continues to lag
economic recovery, with fuel sales so far this year still below
the rates seen a year ago. []
Lower risk appetite also lent support to the U.S. dollar,
which extended a bounce seen late last week and gained in thin
conditions on Monday, with traders covering short positions
ahead of a Federal Reserve monetary policy meet and a Group of
20 Summit. []
Oil rose 3.9 percent last week, thanks to U.S. government
data showing a larger-than-expected draw in crude stocks, heavy
losses in the U.S. dollar and rallying stock markets on the
back of growing ebullience the world economy was en route to
recovery after being wrecked by the worst financial crisis
since the Great Depression.
Though crude prices have only gained about 3 percent so far
this quarter, after shooting up 40 percent in the June quarter,
some analysts said oil prices were set to move higher in coming
weeks amid an economic recovery and seasonal winter 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) on the year, 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 bod 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."
Separately, 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. []
(Reporting by Fayen Wong; Editing by Clarence Fernandez)
