* Euro hits four-year low as strong dollar pressures oil
* High U.S. oil inventories weigh
* Coming up: NYMEX June crude options expire on Monday
(Recasts, updates prices; changes byline and moves dateline
from previous LONDON)
By Robert Gibbons
NEW YORK, May 17 (Reuters) - U.S. oil prices fell to a
five-month low below $70 a barrel on Monday on concerns about
Europe's economy, the weak euro, swollen U.S. oil inventories
and that China's growth may have peaked.
"Concerns about deflation, the European Union and the euro
are bringing down most commodities. And it brings back a focus
on fundamentals and supplies, which are high," said Phil Flynn,
analyst at PFGBest Research in Chicago.
U.S. oil futures hit a 19-month high at $87.15 on May 3
before mounting worries about Europe's debt problems and high
oil inventories pushed crude futures prices below $70 a barrel
intraday on Monday to their weakest since Dec. 14, 2009.
On Monday at 1:09 p.m. EDT (1709 GMT), U.S. crude for June
delivery <CLc1> was down $1.66, or 2.32 percent, at $69.95,
having traded as low as $69.27, the weakest since prices fell
to $68.59 on Dec. 14.
July Brent crude <LCOc1> fell $3.08 to $74.85 a barrel.
The euro fell against the dollar, slipping to a four-year
low at one point, on the persistent fears euro zone austerity
measures will curb economic growth in the region and around the
globe. []
The dollar <.DXY> gained 0.5 percent against a basket of
currencies.
A strong U.S. currency often pressures commodities by
making dollar-denominated commodities, such as oil, more costly
for holders of other currencies and by attracting investors out
of commodities and into the foreign exchange market.
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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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U.S. equities were lower after below-forecast data gauging
New York factory activity dented the economic outlook.
[] []
A leading economic indicator gauge measuring China's
economy showed that growth may have already peaked. The
Conference Board said its leading economic index for China,
released for the first time, rose to 144.5 in March, up 1.1
percent from February. [] []
Tested over four years, the index has proved able to flag
turning points of Chinese economic cycles, the board said.
Volatile trading was expected to be a feature this week
with Monday's expiration of the New York Mercantile Exchange
June crude options on tap and then Thursday's U.S. June crude
contract expiration.
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 <CL-1=R> and the other global crude
benchmark, Brent.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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 outlook for oil
and some other commodities and cited an analysis of fund flows
suggesting that while precious metals could outperform, "crude
oil, copper, and aluminum could be relatively vulnerable."
Copper fell more than 5 percent on Monday and other
industrial metals tumbled. []
Organization of the Petroleum Exporting Countries members
have said they think oil prices should be between $70 and $80,
a range they term fair for both consumers and producers.
Kuwaiti Oil Minister Sheikh Ahmad al-Abdullah al-Sabah,
however, said on May 8 that OPEC was likely to meet if crude
prices fell to $65 a barrel. []
Iraq's oil minister said on Monday OPEC did not need to
meet to discuss output levels because oil markets were
balanced. []
"The market is not oversupplied, there is balance between
supply, OPEC production, and demand," Iraqi Oil Minister
Hussain al-Shahristani told reporters.
(Reporting by Robert Gibbons; Additional reporting by Gene
Ramos in New York, Christopher Johnson in London and Judy Hua
in Singapore; Editing by Marguerita Choy)
