Brent crude futures slipped towards $122 on Tuesday as a steeper than expected fall in China's overall imports in March raised concerns about oil demand growth in the world's second-biggest consumer.
Investors are watching for signs that China can avoid a hard landing as it tweaks monetary and fiscal policies to cut rising costs and help small businesses hit by a global downturn. Overall imports grew 5.3 percent, lagging expectations for growth of 9 percent.
Front-month Brent crude slipped 30 cents to $122.37 a barrel by 0358 GMT, after settling 76 cents lower. The contract slipped as low as $121.02 on Monday, the lowest since March 15. U.S. oil was unchanged at $102.46, after settling 85 cents lower.
"There have been some doubts about global oil demand growth creeping in to the market, and China's crude oil import numbers won't help change that perception very much," said Ric Spooner, chief market analyst at CMC Markets. "They are broadly in line with expectations."
China's exports grew 8.9% compared with a consensus call for 7.2%. The two numbers left the overall trade balance in surplus, reversing February's $31.5 billion run of red ink on the balance of payments and confounding market expectations for a $1.3 billion deficit.
Even so, China's March imports of crude oil rose 8.7% on the year to 5.55 million bpd, off the previous month's record, but still at their third highest ever, data showed, as refiners built stocks while scaling back operations.
The European benchmark may trade between $120 and $125 a barrel and U.S. crude in a $100-$105 range as participants await details of China's gross domestic product, industrial output and U.S. consumer prices due later this week to gauge the demand growth outlook in the world's two top economies, said Ben Le Brun, a market analyst at OptionsXpress in Sydney.
China is expected to report first-quarter growth of 8.3% on the year, according to a Reuters poll. That would compare with growth of 8.9% in the last quarter of 2011 and be the slowest in nearly three years, but still comfortably above China's target of 7.5 percent growth this year.
Oil futures are also under pressure on expectations of a further increase in U.S. commercial crude inventories, building on the biggest two-week increase in more than a decade, as higher imports easily outpaced sluggish refinery demand. Industry group American Petroleum Institute (API) is due to release its numbers later in the day.
Brent is expected to end its current rebound below the April 5 high of $123.54 per barrel and revisit Monday's low of $121.02, while U.S. oil may edge up to $103.40 per barrel, an hourly chart high touched on April 5, according to Reuters technical analyst Wang Tao.
