Crude oil futures fell in Asian trading Thursday, as new measures adopted by China to bring down high property prices damped enthusiasm for a government report showing U.S. oil and fuel inventories in decline.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in November traded at $77.65 a barrel at 0606 GMT, down $0.21 in the Globex electronic session.
November Brent crude on London's ICE Futures exchange fell $0.26 to $80.51 a barrel, despite a prolonged strike by port workers at the Fos-Lavera oil terminal in France, which has raised fears of tightening crude and product supplies in the country.
Oil prices weakened in Asia after China ordered banks nationwide to halt lending for third and subsequent home purchases, at the same time as raising the minimum down payment for all first-time home buyers.
The statement from the State Council, China's cabinet, also said the government aims to speed up a trial reform of a "real estate tax" now being carried out in some cities.
Analysts said this real estate tax was the most worrying, as it could impinge on economic growth, even though there were few details about how it would be implemented.
China is the world's second-largest oil consumer after the U.S. and its economy is skewed toward heavy industry and manufacturing, so any slowdown in growth will have a knock-on effect on oil demand.
Consumption of products such as bitumen, which is used in road building, has soared after Beijing ramped up capital spending last year to cushion the impact on its economy from a sharp slowdown in exports to the U.S. and Europe.
This has contributed to China's oil demand exceeding market expectations in 2010 so far.
However, Beijing was expected to introduce more tightening measures after consumer prices rose 3.5% in August, and speculative activity began to intensify again in China's property market.
Oil prices, which had rallied to a seven-week high in the U.S. overnight, were supported during Asian trading by data from the U.S. Energy Information Administration showing total oil and fuel supplies climbing down from a 27-year high in the week ended Sept. 24.
Crude oil inventories dropped by 500,000 barrels last week, slightly more than analysts had anticipated in a Dow Jones survey. A large drop in distillate stocks, a category including heating oil and diesel, was counter to a market expecting an increase.
Gasoline stocks decreased by 3.5 million barrels, confounding analysts polled by Dow Jones Newswires who had predicted a 600,000-barrel increase in inventories as many U.S. refineries are starting their scheduled maintenance programs.
"Gasoline is the most important fuel for consumer demand in the U.S., and tighter stocks--and stronger implied demand--may signal some improvement in the health of the U.S. consumer," said Lachlan Shaw, a commodities analyst at Commonwealth Bank of Australia Ltd.
At 0606 GMT, oil product futures were mixed.
Nymex reformulated gasoline blendstock for October--the benchmark gasoline contract--fell 45 points to $1.9910 a gallon, while October heating oil traded at $2.1903, 2 points lower.
ICE gasoil for October changed hands at $698.50 a metric ton, up $10.75 from Wednesday's settlement.
