UPDATE 1-Brent falls towards $106 on strong dollar; China data may support

Jacob Gronholt-Pedersen
Monday, 20 Jan 2014 | 1:11 AM ET

* China's economy grows slightly faster than expected in Q4

* Chinese data eases some fears over economic hard landing

* China Dec implied oil demand 10.06 million bpd, down 7.5 percent on-year

* Strong U.S. dollar weighs on oil prices

(Adds China oil demand details, updates prices)

SINGAPORE, Jan 20 (Reuters) - Brent crude edged down towards $106 per barrel on Monday, pulled lower by a strong dollar, while robust Chinese economic data helped ease some fears of a hard landing in the world's second-largest economy.

The initial reaction on oil markets was largely muted after data on Monday showed the Chinese economy eased to 7.7 percent between October and December, from 7.8 percent in the previous three months and slightly ahead of market expectations for growth of 7.6 percent.

"I would think the data is supportive of oil prices. I am certainly expecting somewhat of a relief rally in risk asset over the next 24 hours," said Ben Le Brun, a market analyst at OptionsXpress in Sydney.

"The data is a cause for relief, as it eases some of the fears over the Chinese economy," he said.

Brent crude for March delivery was down 16 cents at $106.32 per barrel at 0517 GMT. The March contract had closed up 73 cents on Friday.

U.S. crude for February delivery was trading 69 cents lower at $93.68 per barrel, after settling up 41 cents at a two-week high on Friday. Floor trading will be closed on Monday and there will be no settlement on the New York Mercantile Exchange due to the Martin Luther King, Jr. Day holiday.

"The stronger dollar looks like it had quite a big impact in the Asian session. I think that's at least part of the reason we're seeing prices lower," said Le Brun.

The dollar index, a gauge of the dollar's value versus six major currencies, hit its highest level since mid-November.

The Chinese data also showed that implied oil demand in December stood at 10.06 million barrels per day (bpd), down 7.5 percent from a record high 10.88 million bpd a year earlier, but up 1.2 percent from November.

Overall for 2013, China's oil consumption experienced a rise of 1.6 percent, or 150,000 bpd, on the year.

Crude processing by Chinese refiners rose 3.3 percent last year to 9.57 million bpd, but less than the 3.7 percent growth seen the year before. The country's top oil firm China National Petroleum Corporation (CNPC) last week forecast China's crude runs to rise 5.1 percent to 10.18 million bpd this year from 2013.


Brent could come under pressure this week on expectations of increased supply from The Middle East and North Africa.

In Libya, the government said it plans to remove protesters who have seized eastern ports used for oil exports within the next few days.

The three ports, which together accounted for 600,000 barrels per day of exports, have been occupied by heavily-armed rebels since the summer.

World powers and Iran are due to start implementing a landmark deal on Monday to curb Tehran's nuclear programme, which could suspend some economic sanctions against the country and bring more oil supply to global markets.

The mutual concessions are scheduled to last six months, during which time the parties aim to negotiate a final accord defining the permissible scope of Iran's nuclear activity.

Sanctions have cut Iran's oil exports by more than half over the past 18 months to about 1 million barrels per day (bpd). Tehran has said it will take six months after sanctions are lifted to return to full oil output capacity of 4 million bpd.

(Editing by Michael Perry and Muralikumar Anantharaman)