* Strong dollar pressures oil as euro hits 4-year low
* High U.S. oil inventories weigh
* Economic gauge indicates China growth may be slowing
* Coming up: API inventory report Tuesday 4:30 p.m. EDT
By Robert Gibbons
NEW YORK, May 17 (Reuters) - U.S. oil prices fell a fifth
straight session and settled at a five-month low on Monday as
the dollar surged against the euro and energy markets fretted
over swollen U.S. oil inventories and signs 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.
After U.S. oil futures hit a 19-month high at $87.15 on May
3, mounting worries about Europe's debt problems and high oil
inventories pushed crude futures prices as low as $69.27 on
Monday, a 20.5 percent drop from that May 3 peak and their
weakest since Dec. 14, 2009.
On Monday, U.S. crude for June delivery <CLc1> fell $1.53,
or 1.53 percent, to settle at $70.08.
Trading volume was heavy <IATY> ahead of the June
contract's expiration on Thursday.
In London, July Brent crude <LCOc1> fell $2.83 to settle at
$75.10 a barrel.
The euro tumbled against the dollar for a fifth straight
session, dropping to a four-year low on nagging fears euro zone
austerity measures will cause a downturn in the region and curb
global growth. []
The dollar <.DXY> gained 0.6 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. stocks fell for much of the session, then bounced and
rallied late as bargain hunters set aside concerns about the
economy and snapped up shares that had been knocked lower.
The main stock index in Shanghai <> fell 5.1 percent
to its lowest close in a year and its steepest one day fall in
eight months. []
A 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.
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.
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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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"The product markets and deferred crude contracts provided
downside leadership for a change as the June WTI crude contract
is undergoing some positioning ahead of Thursday's expiration,"
said Jim Ritterbusch, president at Ritterbusch & Associates,
said in a note.
He added that last week's "huge contango in the $4-5 per
barrel zone (is) unlikely to be seen again and we still expect
the front WTI spread to expire within the $2.50-3.50 a barrel
zone."
The market will get the weekly U.S. oil inventory snapshots
from industry and government, starting with the American
Petroleum Institute's report on Tuesday afternoon.
Analysts surveyed by Reuters on Monday expected crude oil
and distillate stocks to have increased last week, while
gasoline stocks were expected to have declined. []
(Reporting by Robert Gibbons; Additional reporting by Gene
Ramos in New York, Christopher Johnson in London and Judy Hua
in Singapore; Editing by David Gregorio)
