* China PMI slows in June, confirms Q2 economic growth
* Fed may scale back bond-buying programme in Sept policy
* Coming up: Euro zone Markit Mfg PMI for June; 0758 GMT
By Florence Tan
SINGAPORE, July 1 Brent crude slipped below $102
a barrel on Monday, as weak factory data from China reinforced
concerns of slower growth in the world's second-largest economy,
dampening the outlook for oil demand.
China's manufacturing activity slowed in June, with a
private survey by HSBC hitting the lowest in nine months, while
the bank's economist said the third quarter will be challenging
on tighter credit.
Brent crude futures slipped as low as $101.63 a
barrel after the Chinese data. The August contract was down 45
cents to $101.71 a barrel by 0224 GMT. Front-month Brent closed
lower on Friday for the third straight quarter, the longest
stretch of quarterly declines in 15 years.
U.S. crude futures for August fell 40 cents to $96.16
A stronger dollar also weighed on oil as investors bought
the currency on expectations that the Federal Reserves will
start rolling back its bond-buying programme.
A firmer U.S. currency makes dollar-denominated commodities
such as Brent more expensive for holders of other currencies
The Chinese factory data were another indication that policy
makers in Beijing are comfortable with slower economic growth,
said Lee Chen Hoay, an analyst at Phillips Futures.
"We're likely to see China growing slower going forward and
that is going to be reflected in slower oil demand growth,"
Hedge funds and other large speculators slashed their bets
on rising U.S. crude oil prices in the seven days to June 25,
regulatory data showed on Friday.
The spread between U.S. crude and Brent CL-LCO1=R held at
its narrowest since January 2011, as improved logistics allowed
excess oil to flow out of the delivery point for WTI at Cushing,
Canadian crude supply has also been disrupted by significant
flooding in Alberta and likely increased demand for U.S. crude,
Barclays analysts said in a note.
Oil supply from OPEC and the United Kingdom fell in June on
lower output from Britain's Buzzard field and as a Reuters
survey showed that OPEC pumped less crude due to disruptions in
Libya and Nigeria.
Mexican crude production hit its lowest in nearly two years
in May, while exports were their weakest in more than two
decades, official data showed.
In the Middle East, investors are closely watching whether
Iran's president-elect Hassan Rouhani can improve the country's
antagonistic relations with the West.
The United States has maintained its tough stance on Iran,
with its top U.S. energy official saying on Sunday that he
believed the oil market could cope with any further reduction of
Iranian oil exports from the tightening of sanctions on Tehran
over its nuclear programme.
(Reporting by Florence Tan; Editing by Ed Davies)