* U.S. crude oil prices at lowest level since Feb. 5
* Euro hits four-year low as strong dollar pressures oil
* High U.S. oil inventories weigh
* For a technical view, click: []
(Updates throughout, changes dateline, pvs SINGAPORE)
By Christopher Johnson
LONDON, May 17 (Reuters) - U.S. oil prices fell below $70 a
barrel on Monday to their lowest in over three months, extending
a loss of more than 18 percent so far in May on concerns over
Europe's debts, the weak euro and swollen U.S. oil inventories.
The euro sank to four-year lows as Europe's debt crisis led
investors to pull more money from stocks in favour of havens
such as gold and Asian bonds. Base metals slid to three-month
lows as investors shunned riskier assets and on doubts over the
prospects for growth. [] []
U.S. crude for June delivery <CLc1> fell more than $1 to a
low of $69.82 a barrel, its weakest since Feb. 5. It was trading
at $70.30 by 0809 GMT, down $1.31.
So far in May, the U.S. crude contract has lost around 18.5
percent, its biggest monthly drop since November 2008. The
contract is expected to face volatility ahead of Monday's June
crude options expiry and the May 20 June crude contract expiry.
Stockpiles of crude at Cushing, Oklahoma, the delivery hub
for the U.S. contract's West Texas Intermediate benchmark crude,
have risen in the last eight weeks to a record high 37 million
barrels, pushing front-month U.S. crude down relative to later
futures contracts and the other global crude benchmark, Brent.
London Brent crude <LCOc1> dropped 93 cents to $77.00 a
barrel on Monday, holding up much better than its U.S.
counterpart.
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For a graphic of Brent premium to WTI (continuation), click
http://graphics.thomsonreuters.com/gfx/NT_20101705143411.jpg
For a graphic of July Brent over July WTI, click
http://link.reuters.com/ses54k
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"VULNERABLE"
Brokers MF Global expressed concern for the prospects of oil
and some other commodities and cited an analysis of fund flows
suggesting that while precious metals could outperform, "crude
oil, copper, and aluminium could be relatively vulnerable".
"We are especially concerned with what is going on in China,
and suspect that the base metal and energy markets in particular
will be quite vulnerable on the first signs that Chinese growth
is starting to wane -- or ...(of) a rate hike," MF Global said.
Qatar's oil minister said on Saturday he expected further
pressure on oil prices from uncertainty engendered by the
European debt crisis.
"The oil price is not reflective of demand and supply, but
psychological (factors) and uncertainty, especially in Europe
(and due to the Greece) bailout," Abdullah bin Hamad al-Attiyah
told reporters.
"All this put a lot of pressure on the world economy and the
oil price," he said. []
The tense mood also hit stocks. Japan's Nikkei <> shed
2.2 percent, South Korea's stock index <> lost 2.6 percent
and Hong Kong's Hang Seng Index <> fell 2.6 percent.
But the dollar <.DXY> rose 0.75 percent against a basket of
currencies. Gold priced in sterling hit an all-time high at 867
pounds on Monday after the British currency struck a fresh
one-year low against the dollar. []
A strong U.S. currency makes dollar-denominated commodities,
such as oil, more costly for holders of other currencies and
tends to damp prices.
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For the correlation between oil and dollar, click::
http://graphics.thomsonreuters.com/gfx/RSW_20101705111917.jpg
For a graphic of the oil technical outlook, click:
http://graphics.thomsonreuters.com/gfx/CT_20101705092746.jpg
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(Additional reporting by Judy Hua in Singapore; editing by
Keiron Henderson)
