Oil slides on rising supply, central bank fears

By Peg Mackey

LONDON (Reuters) - Brent crude tumbled below $102 per barrel on Tuesday after the United States nearly doubled the estimate of its shale oil and investors worried that central banks, following Japan, could rein in their loose monetary policy.

World share fell and yields on riskier European debt rose after the Bank of Japan's decision not to follow up its $1.4 trillion stimulus programme announced in April.

U.S. oil production has soared as new drilling techniques have unlocked shale deposits countrywide. The Energy Information Administration now estimates such shale oil reserves at 58 billion barrels, up from 32 billion in 2011.

"With the global economy continuing to grow at a snail's pace, the likelihood of a significant growth spurt in oil consumption in the short to even medium term is highly unlikely," said Dominick Chirichella of Energy Management Institute.

Brent crude was off $1.79 to $102.16 a barrel by 1345 GMT, having sunk to $101.82 in earlier trade. U.S. oil shed $1.33 to $94.44.

Increasing oil supplies and waning demand in China, the world's number two oil consumer, are likely to hold down prices.

Data from China showed a slowdown in the economy of the world's biggest energy consumer, with May exports weak and domestic activity struggling to pick up.

Implied oil demand rose in May at its lowest annual rate since September 2012, Reuters calculations show.

The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday trimmed its forecast for 2013 world oil demand growth by 10,000 barrels per day (bpd) to 780,000 bpd.

But it expects demand to grow more quickly during the rest of the year than in the first half due to economic recovery and higher seasonal consumption, it said in a monthly report.

Further bearish news could surface later on Tuesday if oil stockpiles in the United States rise, as predicted.

A Reuters poll of analysts expects U.S. commercial crude oil stockpiles to have risen last week on higher imports, in a counter-seasonal increase that may squeeze prices.

(Additional reporting by Rebekah Kebede in Perth; editing by William Hardy)