MTECHTIPS:-Oil prices fall as China share crisis worsens,

MTECHTIPS:-Oil prices fall as China share crisis worsens, traders hedge for further drops

Oil futures fell again on Wednesday as worries over the Greek debt crisis and China’s stock market turmoil outweighed an expected U.S. inventory drop, with traders anticipating further drops. China’s stocks tanked further on Wednesday in a deepening crisis in which China’s Securities Finance Corp said it would provide liquidity to ease “panic” as over 500 Chinese-listed firms suspended trading. Front-month Brent crude futures were 38 cents lower at $56.47 a barrel at 0452 GMT, and are down over 6 percent so far this week to levels last seen in April. U.S. crude was down 35 cents at $51.98, down more than 8 percent for the week. “A perfect storm of events has hit oil markets,” Morgan Stanley (NYSE:MS) said. The bank said “turmoil in China and Greece may put recent robust demand growth at risk,” although adding that moves so far had been largely on sentiment rather than new oil fundamentals. Yet trade data showed that the market is preparing for further falls. Open interest in options to sell U.S. crude at $50 per barrel has fallen almost 15 percent since the beginning of July, while those to sell at $45 a barrel have risen 12.5 percent. “Funds are contributing to the sell-off, with (U.S.) speculators reducing net-long position in WTI oil by 8 percent in the latest week,” ANZ said. China’s CSI300 index has lost a third of its value since June in the steepest downward correction since the global crisis in 2008, forcing China’s central bank to say it would support stability in the stock market and guard against systemic and regional financial risks.

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