crude at 19-mo low as china demand seen slowin

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    NEW YORK (Dow Jones)--Crude oil futures Tuesday settled below $60 a barrel for the first time since March 2007, on renewed fears that China's economy is cooling.

    Light, sweet crude for December delivery settled $3.08, or 4.9%, lower at $59.33 a barrel on the New York Mercantile Exchange. Oil last settled below $60 a barrel on March 21, 2007. December Brent crude on the ICE futures exchange settled down $3.37 at $55.71 a barrel.

    Chinese oil demand has played a major role in setting prices throughout oil's rise and fall. Oil rose to record levels between 2004 and mid-2008 over concern that rapid growth in China and other developing economies would lead to tight supplies. Now, signs that China's growth rate is slowing are providing the impetus for the oil market's next leg down.

    China reported a smaller-than-expected increase in October imports on Tuesday, two days after announcing a $586 billion economic stimulus package.

    The oil market initially viewed the spending plan as boosting oil demand, but traders are instead focusing on the apparent slowdown that prompted the stimulus in the first place. With China, a rare bright spot for oil demand, apparently fading, pessimism is taking hold in the market.

    "The China import data was definitely part of it, but so was the stronger dollar and just more doom and gloom about the global economy," said Tom Bentz, a broker and analyst with BNP Paribas. "The fact that yesterday's rally fell flat on its face also attracted more aggressive selling."

    Oil may have further to fall this week. Investors are increasingly betting that oil will drop to $55 or even $50 a barrel by Monday, when December crude options expire, Bentz said. Options grant the right to buy or sell oil if futures hit a certain price.

    Weak demand is trumping other factors that in better economic times might have lifted prices, including cold weather in the U.S. Northeast and the prospect of a second production cut by the Organization of Petroleum Exporting Countries.

    "There are a number of factors on the supply side that should get this market to rally, but as long as demand is weak, it will have a difficult time doing that," said Peter Beutel, president of the trading advisory firm Cameron Hanover.

    Front-month December reformulated gasoline blendstock, or RBOB, settled 6.20 cents, or 4.5%, lower at $1.3059 a gallon. December heating oil settled 7.66 cents, or 3.8%, lower at $1.9290 a gallon.


 
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