* Dollar near 4-year high against euro
* U.S. inventory reports delayed by Memorial Day holiday
* Coming Up: U.S. API oil inventory report; 2030 GMT
* For a technical view, click: []
(Updates prices)
By Alejandro Barbajosa
SINGAPORE, June 2 (Reuters) - Oil fell below $72 on
Wednesday in its third straight session of losses, as negative
sentiment pervaded financial markets and investors favoured the
safety of the dollar over riskier commodities.
Oil added to its drop of 1.9 percent on Tuesday, when
China's purchasing managers index (PMI) showed the pace of
manufacturing growth slowed in the world's second-largest oil
consumer.
On Wednesday, Asian stocks fell while the dollar was up
almost a third of a percent against a basket of currencies
<.DXY>. The European Central Bank warned on Tuesday that the
region's banks may face a new wave of losses.
"People are just really cautious and sentiment is bearish,"
said Tony Nunan, a risk manager with Tokyo-based Mitsubishi
Corp.
U.S. crude for July <CLc1> fell 60 cents to $71.98 a barrel
at 0648 GMT, down about 17 percent from a peak above $87 a
month ago. ICE Brent <LCOc1> dropped 52 cents to $72.19.
"The thing that was keeping things lifted was China. I
think we are getting a bit too concerned about one number,"
Nunan said, referring to Tuesday's PMI. "I think China demand
is going to stay robust."
Stronger-than-expected U.S. construction and manufacturing
data on Tuesday temporarily lifted stock markets and oil prices
on Tuesday.
"I don't think the market will go much lower but it needs
some time to regain power," said Keichi Sano, general manager
of research at SCM Securities in Tokyo.
"Data in the U.S. is good and there is no reason to be so
upset about the European credit issues," Sano said.
The market may take further direction from U.S. inventory
reports scheduled for Wednesday and Thursday.
U.S. crude oil inventories were forecast to have slipped by
200,000 barrels last week as refineries increased crude
processing and imports eased, a Reuters survey of analysts
showed. []
For gasoline, the forecast was for a drop of 500,000
barrels as supply was sent to secondary and tertiary sources
ahead of the U.S. Memorial Day long weekend, which kick-starts
the country's driving season running from late May through
early September.
"The oil inventory reports might be able to change the
sentiment of the market," said Sano.
Distillate stockpiles including diesel and heating oil were
expected to have gained 300,000 barrels.
The industry group American Petroleum Institute will issue
its report a day late on Wednesday at 2030 GMT, while
government statistics from the U.S. Energy Information
Administration will be published on Thursday at 1500 GMT,
instead of the usual Wednesday release.
(Editing by Michael Urquhart)
