UPDATE 4-Oil falls to $70, lowest in more than three months

                                
 * U.S. crude oil prices hit 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: [ID:nSGE64G00W]
 
 (Updates detail, comment, prices)
                                
 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. [FRX/] [MKTS/GLOB]
                                
 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 $70.65 by 0844 GMT, down 96 cents.
                                
 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.
                                
 July Brent crude <LCOc1> lost 64 cents to $77.29 a barrel on
Monday, holding up much better than its U.S. counterpart.
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 For a graphic of the July Brent premium 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.
                                
 Members of the Organization of the Petroleum Exporting
Countries have said they think oil prices should be between $70
and $80, a range they say is fair for both consumers and
producers. Recent price falls are worrying OPEC countries.
                                
 Kuwaiti oil minister Sheikh Ahmad al-Abdullah al-Sabah said
last week OPEC was likely to meet if crude prices fell sharply.
                                
 "Sixty-five dollars would ring a bell ... and a meeting," he
told reporters before an Arab Energy Conference. [ID:nLDE6470EE]
                                
 But some traders believe such comments may be dangerous. MF
Global said OPEC may just be giving the oil market a target:
                                
 "OPEC seems to be nonplussed by the recent decline, saying
that it would not consider meeting until prices get to $65," MF
Global said in a note to clients. "This effectively sets up a
downside target that the markets will conceivably gun for, and
one that is not outside the realm of possibility."
                                
 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. [ID:nLDE64E058]
                                
 The tense mood also hit stocks. Japan's Nikkei <.N225> shed
2.2 percent, South Korea's stock index <.KS11> lost 2.6 percent
and Hong Kong's Hang Seng Index <.HSI> fell 2.6 percent.
                                
 But the dollar <.DXY> rose 0.7 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. [GOL/]
                                
 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)