* China credit crunch worries spark oil demand concerns
* Canada floods threaten supply to U.S., cushion prices
* Coming up: API stockpile report; 2030 GMT
By Jessica Jaganathan
SINGAPORE, June 25 Brent crude rose above $101 a
barrel on Tuesday after recent sharp losses, but a gloomy demand
outlook stemming from fears of a liquidity crunch in China and
the U.S. Federal Reserve's plans to roll back its stimulus kept
a lid on gains.
Oil prices have dropped more than $6 from last week's high
to Monday's three-week low, following the Federal Reserve's
signal that the era of cheap central bank money - which has
driven global investment in commodities - was coming to an end.
The declines were exacerbated by worries over attempts by
China, the world's No.2 oil consumer after the United States, to
rein in excessive credit growth.
"People are more comfortable that the U.S. has hit a
sustainable recovery, but China is looking worse. Still, in the
U.S. even though its economy looks like it's recovering, oil
demand isn't, so seems like market is fundamentally weak," said
Tony Nunan, oil risk manager with Mitsubishi Corp in Tokyo.
Brent crude gained 22 cents to $101.38 a barrel by
0659 GMT, after reaching a session low of $100.70 earlier, not
far from a three-week low of $99.67 hit on Monday. U.S. oil
rose 14 cents to $95.32 a barrel.
"I think $100 is the support level for Brent. A lot of the
oil price weakness has to do with the situation in China with
the macro picture not looking good," Nunan said.
China shares pared hefty losses after earlier testing
4-1/2-year lows on Tuesday ahead of a press conference in
Shanghai at which traders hope the Chinese central bank and
authorities will address recent market turmoil.
A firmer dollar after the Fed outlined a possible timeline
for the central bank's winding down of its stimulus program has
also piled up pressure on commodities priced in the greenback by
making them more expensive for holders of other currencies.
"At the same time, bullish positioning and flows into the
WTI-Brent trade are exacerbating the pressure on Brent," Morgan
Stanley analysts said in a note on Monday.
WTI's discount to Brent CL-LCO1=R narrowed to $5.81 a
barrel on Tuesday, its smallest since November 2011, before
widening to $6.06 by 0644 GMT.
U.S. oil prices, however, drew some support from news of
record flooding in Canada's main oil-producing province.
Major oil Canadian pipelines that move almost 1 million
barrels per day of Alberta oil sands crude, much of it bound for
the United States, remained shut on Monday after a spill on a
smaller line was discovered on the weekend, a spokesman for
operator Enbridge Inc said.
U.S. commercial crude oil stocks likely fell two million
barrels on average for the week ended June 21 due to lower
imports and higher refinery activity, a Reuters poll of six
Growing fears Syria's civil war is dragging in other
countries, with deadly bomb attacks in Iraq and fighting in
Lebanon, also cushioned oil
(Editing by Himani Sarkar)