CORRECTED-UPDATE 7-Oil extends fall to biggest two-day drop since June 2012
(Corrects headline and first paragraph to June 2012 from June 3)
* Brent gives up earlier gain in downward slide
* Fell $3.97 Thursday for biggest daily drop since November
* Brent-WTI spread narrowest since November 2011
NEW YORK, June 21 (Reuters) - Oil tumbled for a second session on Friday under pressure from concerns about the economy and demand from China, setting Brent crude on course for its biggest two-day loss since June 2012.
Even as the U.S. equity market stabilized after two days of losses on the back of Federal Reserve Chairman Ben Bernanke's announcement on Wednesday to pare back monetary stimulus, crude prices added to Thursday's losses.
"Without quantitative easing and strong China demand, the oil bull story evaporates," said Phil Flynn, energy analyst at Price Futures Group in Chicago, Illinois.
"The only thing you have left is potential geopolitical risk or weather risk, which at this point seems to be coming down a bit."
Brent crude's two-day loss extended to 5.5 percent, while front-month U.S. futures broke through its 50-day and 100-day moving averages as losses picked up steam after trading opened in the United States.
Both contracts traded down more than $2 a barrel at points, with Brent off $2.00 to $100.15 a barrel by 12:36 p.m. ET (1636 GMT). The spread between Brent and U.S. crude narrowed to $6.90, after hitting a session low of $6.54, its narrowest since Nov. 2011.
Front-month U.S. crude, or West Texas Intermediate, lost $1.89 to trade at $93.25 a barrel, while second month WTI traded down $1.96 to $93.19. Further out on the curve, losses were greater as the WTI complex deepening the backwardated term structure, where near term contracts trade at a premium to later months.
Traders have said the emergence of new pipeline capacity to drain inventories from the Cushing, Oklahoma delivery point for the U.S. contract is bolstering WTI, with further support coming from Fed expectations.
"There's an immediacy to exit farther-out contracts. There's going to be less inflation, and you don't want to be long crude if economic conditions are going to tighten and the dollar's going higher in the long-term," said Bill Baruch, senior market strategist at iitrader.com in Chicago, Illinois.
The Federal Reserve's announcement of tapering also strengthened the U.S. dollar, making it more expensive for holders of other currencies to buy dollar-denominated currencies such as oil.
(Additional reporting by Robert Gibbons and David Sheppard in New York, Peg Mackey and Alex Lawler in London, and Manash Goswami and Jessica Jaganathan in Singapore; Editing by Grant McCool)