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Oil mixed in Asian trade as China hikes interest rates

by Staff Writers
Singapore (AFP) Dec 27, 2010
Crude prices were mixed in post-Christmas Asian trade on Monday as markets were spooked by a surprise Chinese interest rate hike over the weekend, analysts said.

New York's main contract, light sweet crude for delivery in February, fell 23 cents to 91.28 dollars per barrel.

Brent North Sea crude for February delivery was up 12 cents to 93.89 dollars.

The Chinese central bank's "surprise" Christmas Day interest rate raise was scaring crude traders in the first trading day after the holidays, said Serene Lim, oil and gas analyst for ANZ bank in Singapore.

"I think the market was expecting China to raise interest rates in the next year first quarter, but the surprise hike caught the market by surprise," she told AFP.

The People's Bank of China on Saturday raised its interest rates for the second time in less than three months in an effort to curb borrowing, rein in property prices and tame inflation.

One-year lending and deposit rates were raised by 25 basis points each to 5.81 percent and 2.75 percent respectively.

"I think the tightening of the monetary policy would slow down (Chinese) economic growth and oil demand growth for next year," Lim added.

China is the world's biggest energy user and second-largest oil consumer, therefore any impact on its economy would trigger repercussions on crude markets.

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