NEW YORK (Reuters) - Oil prices fell below $75 a barrel on Tuesday as a credit clampdown in China and weak U.S. home prices data raised concerns about economic recovery and a potential rebound in energy demand.
U.S. crude oil dropped 55 cents to settle at $74.71, having traded as low as $73.82, the lowest intraday price since December 22. In London, Brent crude fell 40 cents to settle at $73.29 a barrel.
China implemented an announced lending clampdown, hitting investor confidence and sending emerging market stocks down more than 2 percent.
U.S. home prices slipped in November and were softer than expected, according to Standard & Poor’s/Case-Shiller indexes.
“The home prices report disappointed, but consumer confidence does indeed appear to have helped ignite a technical bounce,” said Stephen Schork, editor of the Schork Report, an industry newsletter, in Villanova, Pennsylvania.
Consumer confidence rose for a third straight month to its highest level since September 2008, according to the Conference Board.
Investors have looked to wider economic data over the past year for signs of economic recovery and a potential rebound in energy demand.
U.S. stocks edged higher as the better-than-expected consumer confidence data helped erase losses and pulled crude off early lows.
China’s move was a setback for the view that puts the prospect of rising Asian demand ahead of the oil market’s weak current fundamentals, analysts said. The prospect of Asia-led future demand growth has been a factor in oil’s price rise of more than 60 percent in the past year.
“The fundamental link to current prices is weak. Hence, oil prices need at least some general optimism that boom times are around the corner,” said Olivier Jakob, an analyst at Petromatrix.
“That general optimism depends a lot on China’s consumption ... and that will be somewhat challenged by the Chinese government trying to regulate the formation of bubbles.”
After the news that China implemented its planned increase in required reserves for some banks, Asian and European stocks fell, gold and copper slipped and the dollar gained.
Highlighting fears that a global recovery may be sputtering, South Korea reported weaker-than-expected growth in the fourth quarter.
Britain came out of recession in the fourth quarter, but with a lower growth rate than expected. Standard & Poor’s cut its rating outlook on Japan.
The U.S. Federal Reserve is not expected to indicate that it will raise its benchmark interest rate any time soon. The Federal Open Market Committee, the Fed’s policy-setting group, begins a two-day meeting on Tuesday.
Oil inventories in the United States, the top oil consumer, were expected to rise further in reports due this week. Crude stocks probably rose by 1.4 million barrels, a Reuters poll of analysts showed.
The survey forecast that gasoline stockpiles climbed 1.1 million barrels and distillates, which include heating oil and diesel, fell 1.7 million barrels last week.
Industry group American Petroleum Institute issues its weekly inventory report later on Tuesday. The U.S. government’s Energy Information Administration follows on Wednesday.
Additional reporting by Robert Gibbons and Gene Ramos in New York, Alejandro Barbajosa in Singapore; editing by Jim Marshall