LONDON -- Oil fell in New York for the first day in five after China, the world's second-largest oil consumer, sought to cool its economic expansion.
The People's Bank of China ordered banks to set aside more deposits as reserves for the second time in a month, sending crude below US$74 a barrel and strengthening the dollar. A weekly Energy Department report Friday may show crude and gasoline supplies increased last week, according to a Bloomberg News survey.
“The oversupply in the market is quite significant at the moment,” said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. “It's difficult to see why prices will continue to hover around current levels. A price below US$70, maybe around US$60, would be more sustainable.”
Crude oil for March delivery fell as much as US$1.72, or 2.3 percent, to US$73.56 a barrel in electronic trading on the New York Mercantile Exchange and was trading at US$73.98 at 10:40 a.m. in London.
Brent crude oil for April delivery fell as much as US$1.52, or 2.1 percent, to US$72.60 a barrel on the London-based ICE Futures Europe exchange. The contract was at US$73.00 at 10:39 a.m. London time.
China's central bank said Friday it will raise banks' reserve requirement ratio by 50 basis points. China's policy makers aim to avert asset bubbles and restrain inflation after flooding the economy with money last year to drive recovery from the first global recession since World War II.
On Thursday, New York crude futures rose 1 percent to settle at US$75.28.
