* Crude down nearly 5 pct since last week's 25-month high
* Dollar hits six-week high vs euro <EUR=>
* Concerns over impact of possible higher Chinese rates
* Technicals show oil could drop to $83.62 []
* Coming up: API oil inventory data; 2130 GMT
(Updates with detail, comment)
By Christopher Johnson
LONDON, Nov 16 (Reuters) - Oil fell more than $1 to under
$84 on Tuesday, weighed down by a stronger dollar, concerns over
the possibility of tighter monetary policy in China and ahead of
expected news of a rise in U.S. crude stockpiles.
The dollar touched a six-week high against the euro as
investors cut exposure to commodities and risk and as
anticipation of the Federal Reserve's $600 billion bond
programme pushed up U.S. Treasury yields. [] []
Concerns over the health of the euro zone as well as the
prospect of tighter Chinese monetary policy weighed on
commodities, analysts said.
China's key stock index fell by 4 percent on Tuesday, driven
by rumours of more aggressive action to control inflation
dumping large cap bank and energy shares. []
U.S. crude for December <CLc1> dropped by $1.56 per barrel
to a low of $83.30 and was trading around $83.45 by 1425 GMT,
extending losses from the previous session. ICE Brent for
January <LCOc1> fell $1.20 to $85.56.
"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."
The drop in oil prices came most sharply at the front end of
the futures market, helping to steepen the contango in the
forward curve.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic of the forward price curve for U.S. light
crude oil, click: http://link.reuters.com/was65q
For an interactive graphic of the euro zone debt crisis,
click: http://r.reuters.com/hyb65p
For a graphic of the performance this year of the
commodities in Reuters Jeffries CRB index, click:
http://link.reuters.com/kew48n
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Analysts expect crude stockpiles in the United States, the
world's largest energy consumer, to have edged up last week,
following a surprisingly large drawdown the week before. []
Crude stockpiles were seen rising by 400,000 barrels, while
distillates were expected to fall by 1.6 million barrels, a
Reuters poll showed.
Industry group the American Petroleum Institute (API) will
issue its latest U.S. crude oil inventory data at 2130 GMT on
Tuesday, followed by government data from the Energy Information
Administration (EIA) on Wednesday.
Crude has fallen nearly 5 percent from a 25-month peak of
$88.63 last week. The recent sell-off was sparked by fears that
China may raise interest rates to slow its economy.
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.
A stronger dollar can weigh on oil prices because it
attracts investors away from dollar-denominated crude by making
oil more expensive for users of other currencies.
(Editing by William Hardy)
