Asian Dragon Concerns Exert Pressure On Oil Futures

A report in the China Securities Journal renewed investor concerns over a potential slowdown in commodity demand, prompting them to shed riskier assets and scurry for safe investments. A strengthening of the greenback added to the pressure, resulting in crude futures sliding today.

Light, sweet crude for February delivery plummeted $1.53, or 1.9%, to $77.49 a barrel on the New York Mercantile Exchange (NYMEX). The February contract expires today. Meanwhile, Brent crude on the ICE futures exchange slipped $1.40, or 1.8%, to $76.23 a barrel. The more-active March contract declined $0.47, or 0.6%, to $78.85.

China's Banking Regulatory Commission Chairman clarified, however, that banks have not been told to suspend lending in January. The regulatory body remains committed to controlling the pace of credit growth this year, which will lead to a heavy drop in new yuan lending.

On concerns of an overheating of its economy, China had last week taken steps to drain excess liquidity from its markets by raising the key reserve requirement rate.

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