* U.S. May retail sales fall for first time since Sept
* Chinese industrial output falls in May vs April
* Coming up: CFTC positions report at 3:30 p.m. EDT Friday
(Recasts, updates prices, market activity; new byline, changes
dateline from previous LONDON)
By Robert Gibbons
NEW YORK, June 11 (Reuters) - U.S. oil prices fell more
than 2 percent on Friday as reports of an unexpected fall in
May retail sales in the United States and easing industrial
output in China revived concerns about the economy.
Prices fell sharply after the U.S. Commerce Department
reported that total retail sales fell 1.2 percent in May, the
first decline since September, after April's upwardly revised
0.6 percent rise. []
Crude prices briefly pared losses on news that U.S.
consumer sentiment improved in early June to its strongest
level in nearly 2-1/2 years. []
At 12:30 p.m. EDT (1630 GMT), U.S. crude for July <CLc1>
was down $2.11, or 2.8 percent, at $73.37 a barrel, trading in
a range from $73.30 to $75.64. A lower finish would snap a
string of three higher closes.
ICE Brent <LC0c1> was trading down $1.63 at $73.66.
"The retail sales number put a damper on things and the
report on Chinese inflation had already helped pull oil back,"
said Robert Yawger, senior vice president, energy futures at MF
Global in New York.
Chinese inflation quickened to a 19-month high in May, and
some analysts said China needs to stave off the risk of
overheating by raising interest rates and letting the yuan
strengthen. []
The U.S. retail sales report weighed on the Dow Jones
Industrials and the S&P 500 stock indexes on Friday, though the
better-than-expected read on consumer sentiment and technology
sector strength had lifted the Nasdaq. []
The consumer sentiment report helped the dollar strengthen
against the yen and euro. []
A stronger dollar can pressure oil prices by making it more
expensive for consumers using other currencies and also pulling
investors from energy into foreign exchange markets.
Most analysts expect the pace of fuel demand recovery in
the euro zone to slow, making the market more reliant on China
to drive growth but hindering China's ability to play that
role.
On Thursday, a report of a 48.5 percent surge in Chinese
exports in May helped oil prices surge 2 percent.
The International Energy Agency also revised its 2010 oil
demand growth forecast slightly higher in a report on Thursday,
adding to the bullish sentiment in the market after a
government oil inventory report showed lower crude stockpiles.
But Friday's data showing China's industrial output slowed
in May from April, fueled concerns that economic growth in the
second largest energy consumer may slow. []
"We are currently stabilizing towards the top end of the
recent range but it seems to be having trouble getting higher
than this," said Christopher Bellew of Bache Commodities.
"Sentiment is still fairly fragile and people are worried
about the depth of the European crisis."
At near $75 a barrel, oil prices are now in the middle of
what Saudi Arabia's oil minister calls the "ideal realm"
between $70 and $80 a barrel.
But prices are still nearly 15 percent below the 19-month
high of $87.15 touched in early May.
MF Global's Yawger and other sources noted that Friday's
early $75.64 intraday high was near $75.70, where technical
resistance was expected, at the 50-percent retracement of the
drop from the May 3 $87.15 high, a 19-month peak, to the $64.24
low on May 20, the day the June contract expired. Graphic:
http://link.reuters.com/vaz59k
(Additional reporting by Alejandro Barbajosa in Singapore;
Emma Farge and Ikuko Kurahone in London and Gene Ramos in New
York; Editing by David Gregorio)
