* U.S. Fed to hold two-day meeting, consider tapering
* Investors worry about commodities demand in emerging
* U.S. new-home sales come in lower than expected
By Anna Louie Sussman
NEW YORK, Jan 27 Brent crude oil futures shed
more than $1 a barrel on Monday, and U.S. crude fell almost as
much, as investors kept dumping risky assets on worries about
weaker growth in emerging markets.
Global equities markets extended losses from last week on
concerns about China's economic slowdown and expectations that
the U.S. Federal Reserve will scale back its bond buying by
another $10 billion a month.
The U.S. government also announced weaker-than-expected new
home sales data, causing U.S. equities to give back early gains
and triggering a dip in Brent and U.S. crude oil futures prices.
"There were a lot of warning signs from China and the
emerging markets late last year, and now we're in a new year and
not quite as optimistic," said Phil Flynn, an analyst at the
Price Futures Group in Chicago, Illinois.
Brent crude shed $1.19 to settle at $106.69 a
Brent's premium to U.S. oil was mostly flat on Monday,
hovering near Friday's settlement of $11.24. The spread had
traded as tightly as $9.47, its lowest price in more than two
months, on Friday.
U.S. crude oil futures fell 92 cents to settle at
$95.72. The U.S. benchmark showed some resistance in the $97 to
$98 range, where prices ended last week.
"The 200-day moving average in WTI was breached, and shorts
were covered," said Bill Baruch, senior market strategist at
iitrader.com in Chicago. "If the Fed gives a vote of confidence
(on Wednesday), I think that could give the equity and crude
markets support ... but I think you're going to see people quick
to the trigger in selling before the $100 mark."
The Fed will conclude its regular two-day meeting on
Wednesday. Analysts said the central bank was intent on cutting
the stimulus again in spite of the sharp selloff of emerging
market assets in Turkey, Argentina and elsewhere.
EMERGING MARKET CONCERNS
Low interest rates in the United States and other developed
countries had made emerging markets more attractive to
investors. Now that the Fed is changing course, investors are
exiting emerging markets with large current account deficits,
raising fears over their future economic health.
Analysts also said concerns over Chinese growth following
weaker-than-expected data last week were weighing on Brent. A
Reuters poll showed economists expected Chinese gross domestic
product growth to slow to 7.4 percent in 2014 from 7.7 percent
Forecasts of two weeks of cold weather in the U.S. Midwest
and heavily populated Northeast supported domestic crude. Last
week's opening of the southern leg of TransCanada Corp's
Keystone pipeline, which will help alleviate the supply
bottleneck at the contract's delivery point in Cushing,
Oklahoma, had boosted U.S. crude in four out of the past five
"We're kind of getting over the excitement of the reversal
of the pipeline," said Flynn.