Oil slips below $106; stimulus hopes fade

LONDON (Reuters) - Oil slipped below $106 a barrel on Tuesday as investors grew less convinced that new stimulus measures from central banks in the United States and Europe would be enough to revive fragile economies and boost oil demand.

Uncertainty over the health of the global economy offset news of lower production from the 12-member Organization of the Petroleum Exporting Countries (OPEC) and an expected drop in U.S. crude stockpiles.

Brent crude eased 77 cents to $105.43 per barrel by 0813 GMT, having dropped to a low of $105.27 in earlier trade. U.S. crude was down 27 cents at $89.51, after hitting a low of $89.34.

"For the moment, the economy remains the main focus for most investors; that isn't to say that the situation in Iran and the Middle East isn't of concern," said Ric Spooner, chief market analyst at CMC Markets.

"But the market is for the moment well supplied to deal with any immediate supply disruptions."

Brent has risen 8 percent in July, the biggest monthly gain since February, while U.S. crude has added more than 5 percent so far this month, snapping a two-month losing streak.

Supply from OPEC fell by 450,000 barrels per day (bpd) in July to 31.18 million bpd, a Reuters survey showed. Investors are now eyeing data on stockpiles in top oil consumer the United States.

U.S. crude stockpiles are expected to have fallen by 1.6 million barrels last week due to lower imports, a Reuters poll of analysts showed ahead of weekly inventory data from the American Petroleum Institute later on Tuesday.

Oil prices continue to be supported by worries about supply from sanctions-hit Iran. Iran and the West have been at odds over Tehran's nuclear ambitions, resulting in crippling sanctions that have cut the flow of Iranian oil into international markets.

But sluggish growth in the U.S. and continued uncertainty over how quickly European leaders can revive their economy weighs heavily on the minds of investors.

European Central Bank President Mario Draghi promised last week to do what it takes to protect the euro, raising expectations of new policy measures to solve the debt crisis when the ECB meets on Thursday.

Spain slid deeper into recession in the second quarter as a tough new round of austerity to head off the budget crisis that threatens the euro affected both overall demand and the price consumers have to pay for goods.

(Additional reporting by Luke Pachymuthu in Singapore; Editing by Alison Birrane)

Source: http://news.yahoo.com/oil-slips-below-106-stimulus-hopes-fade-084550493--finance.html

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