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UPDATE 9-Oil dives 5 pct to six-month low under $50 on China worry

Published 04/08/2015, 06:20 am
© Reuters.  UPDATE 9-Oil dives 5 pct to six-month low under $50 on China worry
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* Commodity markets battered by weak China data; CRB at 12-yr low

* Brent strikes late Jan bottom; seen testing 2015 low of $45.19

* Gasoline futures tumble, weighing further on U.S. crude

* Oversupply worries mount as OPEC pumps to the hilt (Writes through with settlement prices, context on global commodity selloff)

By Barani Krishnan

NEW YORK, Aug 3 (Reuters) - Oil prices lurched 5 percent lower on Monday to their lowest since January, taking global benchmark Brent below $50 a barrel as weak factory activity in China deepened a commodity-wide rout.

Growing concerns over excess global oil supplies, heavy selling in pumped-up gasoline futures and technically driven momentum trading knocked prices to within a few dollars of the six-year lows touched at the start of this year.

U.S. crude had already fallen 21 percent in July, its worst month since 2008 amid mounting evidence of an expanding global glut and a stock market collapse in China, the world's largest energy consumer.

On Monday, the rout deepened after data showed Chinese manufacturing growth unexpectedly stalled in July and U.S. consumer spending advanced at its slowest pace in four months in June as demand for automobiles softened. ID:nL1N10E0NV ID:nL3N10C03N

Brent LCOc1 , the global benchmark for crude, settled down $2.69, or 5.2 percent, at $49.52 a barrel. Brent's session bottom of $49.36 was within striking range of its 2015 low of $49.19.

U.S. crude CLc1 settled down $1.95, or 4.1 percent, at $45.17, just about $3 above its 2015 bottom.

"Economic weakness has set the tone," said Matt Smith, director of commodity research at ClipperData, a New York-based energy database.

"But the gasoline crack spread is also unraveling," Smith said, referring to the difference between gasoline and U.S. crude prices, which sets the profit margin for refiners.

Gasoline's front-month continuation contract RBc1 settled down almost 9 percent from Friday's close, its most in a day since October 2012, Reuters data showed. The gasoline crack, or spread with U.S. crude CL-RB1=R , narrowed to below $26, its lowest in more than a week.

"The chart is looking anything but constructive," said Fawad Razaqzada, technical analyst in London for forex.com, who expects both benchmarks to set new lows for the year soon.

Oil hasn't been falling alone. The 19-commodity Thomson Reuters/Core Commodity CRB Index .TRJCRB , a global benchmark, hit its lowest since 2003, erasing almost all the gains of the decade-long commodities "super-cycle" fueled by China. COM/WRAP

A Reuters survey last week showed oil output by the Organization of the Petroleum Exporting Countries (OPEC) reached the highest monthly level in recent history in July, reinforcing the idea that Saudi Arabia and other key OPEC members are focused on defending market share. ID:nL5N10A3WL

Hedge funds and other speculators have cut their bullish exposure to U.S. crude to a near 5-year low, trade data showed on Friday, as local drillers added rigs and pumped at full throttle despite the global oil glut. ID:nL1N10B2X0 RIG/U

Large investors in Brent also cut their holdings last week by the most in percentage terms since September 2014. O/ICE

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