RTRS:COMMODITIES-Oil slips, spotlight on China commodities demand
* CME hikes margin calls for crude futures
* Eyes on China inflation, tightening
By Pratima Desai and Manolo Serapio Jr
LONDON, May 10 (Reuters) - U.S. oil prices tumbled on Tuesday towards $100 a barrel as the cost of holding the commodity rose and markets started to worry that China may extend monetary tightening to slow economic growth.
Copper steadied, but again uncertainty about demand from top consumer China was expected to check prices, while gold slipped on dollar strength and lower crude oil prices.
Oil earlier fell about 2 percent after CME Group Inc (CME.O), the world's largest commodities exchange, raised margin calls for crude futures by 25 percent as volatility soared. It is the fourth hike since February. [ID:nN09267830]
Brent crude LCOc1 was down 0.6 percent to $115.36 a barrel at 0905 GMT, after posting the second-largest gain on record on Monday. U.S. crude CLc1 was down one percent at $101.53.
The cumulative increase in margins to maintain positions on U.S. crude benchmark West Texas Intermediate CLc1 since February is 67 percent, with the cost rising to $6,250 per contract from $3,750. [ID:nN09267830] [O/R]
"Having high margin requirements makes it more difficult for speculative traders to enter the market, so naturally that will cause less speculative activity in oil markets," said Ben Westmore, commodity economist at National Australia Bank.
China's April crude oil imports rose 1.7 percent from a year earlier to 5.24 million barrels per day (bpd), their third highest, official data showed on Tuesday, but the data focused attention on likely future Chinese demand. [ID:nL3E7GA0AX]
"People are still trying to figure out how much monetary tightening will play a role in slowing growth over the next quarters," said Jeremy Friesen, commodity strategist at Societe Generale.
"The numbers from China were pretty good. People are now going to be paying attention to whether you see a real drop in demand, related to high prices and tight monetary policy." <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
