Oil drops nearly 4% on China economy fears

NEW YORK: Oil prices fell nearly 4 percent to below $70 a barrel on Monday as fear of a curb in Chinese bank lending dented optimism about the pace of economic recovery and a potential rebound in global energy demand.

US crude for October delivery settled down $2.78, or 3.8 percent, at $69.96 a barrel, having fallen as low as $69.13 in intraday trade. In London, Brent crude settled down $3.14 at $69.65 a barrel.

China's key stock index dived 6.74 percent on Monday to a three-month low, prompted by concern that China's government is trying to moderate economic growth and choke off some speculation in its stock market by tightening bank lending.

European equities closed lower and US stocks fell after China's index fall.

"The oil markets have been strongly affected by what's going on in China, where the fear is that authorities will rein in on lending and in the process curtail growth," said Phil Flynn, an analyst at PFGBest Research in Chicago