* Global stocks fall to lowest level since September
* U.S. crude inventories seen up slightly last week
* Coming up: API oil inventory data at 4:30 p.m. EDT
(Recasts, updates prices)
By Robert Gibbons
NEW YORK, May 25 (Reuters) - U.S. oil futures tumbled 2
percent on Tuesday, falling below $70 a barrel as concerns over
global economic growth revived risk aversion, sending investors
fleeing from the euro to dollar safety.
"It's risk aversion, falling stock markets and a stronger
dollar. People are worried the euro zone crisis will spread and
derail the global economic recovery," said Carsten Fritsch, an
analyst at Commerzbank.
U.S. crude <CLc1> fell $1.46, or 2.08 percent, to settle at
$68.75 a barrel, trading in a range from $67.15 to $69.91.
Market sources noted crude pared losses after the U.S.
consumer confidence index hit a two-year high in
May.[]
Dropping back from a 2010 peak of $87.15 on May 3, the
highest since October 2008, U.S. crude prices could be set to
have the biggest monthly loss since the height of the financial
crisis.
ICE Brent crude <LCOc1> fell $1.62, or 2.28 percent, to
settle $69.55 a barrel.
The tumble in oil has sent OPEC's reference crude oil
basket below the lower end of the $70-$80 range many in the
producer group have said is the preferred range.
[]
The euro neared a four-year low against the U.S. dollar and
hit a 8-1/2-year trough against the yen after Spain's weekend
takeover of a small bank fueled fears the euro zone's sovereign
debt crisis may spread.
The U.S. dollar index <.DXY> rose 0.4 percent as investors
moved away from commodities to the greenback.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic on the performance of oil and other
commodities so far this year, click here:
http://link.reuters.com/hun72k
For a graphic on the close correlation between oil and the
euro, see here:
http://link.reuters.com/wew36k
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World stocks fell to their lowest level since September
2009 on Europe contagion fear and amid growing tension between
North and South Korea. [] U.S. stocks fell early,
joining in the broad global sell-off and the concern that
economic recovery will be hampered, but pared losses late and
ended mixed. []
Equities are broadly viewed as an indicator of future
energy demand growth.
In an indication of how Europe's crisis is affecting
investor perception, Bank of America Merrill Lynch cut its oil
demand growth forecasts for 2010 to 1.5 million barrels per day
from 2 million bpd due to anticipated slower global economic
growth in the second half of 2010. []
SUPPLY COMFORT
Oil markets remain well supplied, with the Organization of
the Petroleum Exporting Countries pumping about 2 million
barrels per day above agreed output targets.
Oil ministers from Kuwait and the United Arab Emirates on
Tuesday downplayed the slide in oil prices and said OPEC had no
plans to call an emergency meeting. []
But ministers from Libya and Algeria have expressed more
concern as crude prices headed below $70.
A Reuters survey showed analysts were divided over the
direction of U.S. oil inventories last week. Averaging the
expanded poll of 15 analysts yielded a forecast for crude to
have risen last week, but only 200,000 barrels. []
Distillate stocks, including heating oil and diesel, were
expected to be unchanged, with gasoline stocks seen down only
200,000 barrels.
Crude oil stocks at the delivery hub for U.S. futures
contracts in Cushing, Oklahoma, are already at a record high.
The American Petroleum Institute will release its oil
inventory report on Tuesday at 4:30 p.m. EST (2030 GMT).
The U.S. Energy Information Administration's weekly report
is due on Wednesday morning.
U.S. retail gasoline demand slipped in the week ending May
21, against the previous week, MasterCard SpendingPulse report
said on Tuesday. But demand was up versus the year-ago period.
[]
(Additional reporting by Gene Ramos in New York, Emma Farge
in London and Alejandro Barbajosa in Singapore; Edited by
Sofina Mirza-Reid)
