* China surprises markets, lifts banks' reserve requirement
* EIA weekly inventory data due at 1600 GMT
* Euro hits nine-month low against dollar
(Updates prices)
By David Sheppard
LONDON, Feb 12 (Reuters) - Oil fell by more than $1 to near
$74 a barrel on Friday after the outlook for energy demand was
dented by China's surprise decision to increase banks' reserve
requirements for the second time this year.
China's central bank on Friday said it was raising the
requirements from the end of this month in a bid to cool a
rapidly growing economy. Few in the market were expecting the
move. []
Rapid growth and development in China, the world's second
largest energy consumer, has boosted oil prices in recent years.
The International Energy Agency (IEA) said on Thursday oil
demand has peaked in developed countries, but it still predicts
world oil consumption will rise by 1.6 million barrels per day
(bpd) this year to 86.5 million bpd due to emerging market
growth. []
U.S. crude for March delivery <CLc1> fell $1.28 to $74.00 a
barrel by 1358 GMT, after settling 76 cents higher at $75.28 a
barrel on Thursday. Brent crude for the new front month of April
<LCOc1> fell $1.16 to $72.96.
"Markets may view it negatively in the short-term as China
might import less commodities," Barclays Capital analyst Amrita
Sen said.
"But in the longer term we definitely see it as beneficial
for commodity demand. The worst thing that could happen to
commodity markets would be for China's growth to shoot to 15
percent then crash to 5 percent. The policy of tightening keeps
their growth on a far more sustainable path."
The U.S. dollar rose to its strongest level against the euro
since May 2009 on the news, as investors moved away from riskier
assets. A stronger greenback often pressures commodities priced
in dollars as they become more expensive for holders of other
currencies.
U.S. OIL DATA
Despite the dip, oil is on track for a 3 percent rise this
week, led by signs of higher heating demand due to U.S.
snowstorms and a bullish global oil demand forecast from the
IEA. []
European leaders sought to prop up Greece with words of
support at a summit on Thursday, but failed to offer concrete
proposals to help the country tackle its debt crisis.
[]
The International Monetary Fund on Friday joined the EU in
pledging support for Greece, but investors remain wary.
"There's a lot of scepticism in the market about the EU
summit, because there's no definitive plan -- only political and
moral support -- so that's boosting the dollar and pressuring
oil," said Michelle Kwek, an analyst at Informa Global Markets
in Singapore.
"Markets are still very much on edge, and that's going to
be the main factor driving prices over the next week."
Traders will also scour weekly U.S. oil inventory data on
Friday from the Energy Information Administration (EIA) for
further clues on demand in the world's largest consumer.
The EIA data was delayed until Friday at 1600 GMT from its
usual Wednesday release because of the severe snowstorms that
have swept the U.S. East Coast. []
A report from the American Petroleum Institute (API) on
Tuesday showed U.S. crude inventories jumped by 7.2 million
barrels to 337.6 million last week, despite a drop in crude
imports, against expectations of a 1.5 million rise, []
"The EIA inventory numbers are on tap for Friday, and should
they come in with substantial builds we could see crude oil
prices roll back some of their recent gains," MF Global analyst
Edward Meir said.
(Additional reporting by Jennifer Tan in Singapore; editing by
xxxx)
