(Reuters) - Brent futures slipped to $114 on Monday, falling for a second day due to worries over the worsening outlook for demand growth, although mounting supply concerns over escalating tension in the Middle East kept losses in check.
A poll indicating China may have expanded in the third quarter at the slowest pace since the first three months of 2009 overshadowed data over the weekend showing an improvement in commodity imports by the world's second-biggest oil consumer.
Prices were also hurt as the International Energy Agency (IEA) last week cut its demand growth forecast for next year.
Brent crude had slipped 56 cents to $114.06 a barrel by 0629 GMT, after sliding 75 cents in the previous session. U.S. oil fell more than $1 to $90.82 earlier in the session and traded 79 cents lower at $91.07.
"China is now shifting to a more moderate growth rate of 7 to 8 percent, but most investors are seeing it as a negative," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investment.
"The heating up of tensions in the Middle East and limited spare supply capacity are supporting prices."
The IEA said ample supply from North America and Iraq, coupled with declining global demand, could ease prices over the next five years.
It also cut its demand growth projection for 2011-2016 by 500,000 barrels per day (bpd) from its previous report and cut its 2013 demand outlook by 100,000 bpd, citing lower consumption in Europe, the Americas and China.
China's annual growth probably slowed for a seventh straight quarter in the July-September period to the weakest level since the depths of the global financial crisis, a Reuters poll showed. The median forecast of 26 analysts is for the economy to expand 7.4 percent from a year earlier, down from 7.6 percent in the second.
The weak growth expectations overshadowed data this weekend that showed China's commodity imports recovered in September. Crude oil imports were 12.8 percent higher on a daily basis than the 22-month low of 4.33 million bpd in August.
"A GDP reading far below the official 7.5 percent growth target could be taken negatively by market participants," analysts at Credit Suisse said in a note. "However, our economists argue that while the latest economic numbers may still look weak, growth momentum should improve in Q4."
Increased tension between Turkey and Syria put the brakes on declining prices as it threatens to add to a geopolitical crisis over concerns about Iran's disputed nuclear program.
In the latest development, Turkey has banned all Syrian aircraft from its air space. The crisis has worsened in the past two weeks because of cross-border shelling and touched a low when Ankara forced down a Syrian airline.
"Geopolitical tensions have been intensifying again lately and causing oil market participants to re-price the geopolitical risk premium," Credit Suisse said. "As physical supply and demand balances have remained relatively tight, we think the oil market bias should remain to the upside in the weeks ahead."
Brent is expected to fall to $111.85 per barrel as a rebound from $107.67 has finished at $116.02, while U.S. oil could fall to $88.30 per barrel, according to Reuters technical analyst Wang Tao.
"Oil markets should continue to swing between tight supply concerns and slowing global demand this week," analysts at ANZ said in a note. "Crude prices are expected to move lower this week unless Middle East tensions escalate."
(Additional reporting by Manolo Serapio Jr., Editing by Clarence Fernandez)
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