Oil slides on euro zone, China fears

US crude fell more than a $2.15 to $93.98.- lowest since Dec 19

Oil fell sharply on Monday, as mounting political uncertainty in Greece and worry about the prospects for growth in China added to a sense that the demand outlook is worsening.

Adding to jitters about the future of the euro zone, Greece's radical leftist leader spurned an invitation from the president for a final round of coalition talks on Monday, pushing Athens to the brink of fresh polls.

This added to already mounting worries of a global economic slowdown triggered by last week's lacklustre industrial output data from China, the world's second-largest economy and energy consumer.

Brent crude slipped $1.83 to $110.43 a barrel by 0854 GMT, stretching its losses into a third session, after settling at $112.26 on Friday.

 

It earlier fell more than $2, and was heading for its lowest close since January 25.

US crude fell more than a $2.15 to $93.98. It sunk to its lowest since December 19.

"With the Greek elections putting in peril the euro zone unity, the Chinese industrial production putting in peril the main engine of growth...last week was a pretty bad week for global sentiment," said Olivier Jakob, at Petromatrix in Zug.

He said this poor sentiment was dragging on into this week, and that a Saudi call for oil at $100 per barrel was adding to the negative tone.

Saudi target price

The world's biggest exporter, Saudi Arabia wants an oil price of around $100 a barrel and would like to see global inventories rise before demand picks up in the second half of the year, Oil Minister Ali al-Naimi said.

China's central bank on the weekend cut the amount of cash banks must hold as reserves, freeing an estimated 400 billion yuan for lending, after data showed the economy weakening, not recovering, from its slowest quarter of growth in three years.

German chancellor Angela Merkel's conservatives suffered a defeat on Sunday in an election in the country's most populous state, a result which could embolden the left opposition to step up attacks on her European austerity policies.

Giving some support to the oil price, Iran warned Western powers on Sunday that applying pressure on Tehran could jeopardise talks on its nuclear programme, state television reported.

Iran's dispute with the West about its nuclear programme and a European Union embargo on Tehran's oil, set for July, sent prices soaring in the first quarter.

Iran and the International Atomic Energy Agency (IAEA) are holding a third round of talks in Vienna on May 14-15, where the U.N. atomic watchdog will press its demand for access to an Iranian military site.