* U.S. May retail sales fall, pressuring crude
* Chinese industrial output falls, weighs on oil
* Coming up: MasterCard gasoline demand data on Tuesday
(Recasts, updates with settlement prices)
By Robert Gibbons
NEW YORK, June 11 (Reuters) - U.S. oil prices fell more
than 2 percent on Friday as an unexpected fall in May retail
sales in the United States and easing industrial output in
China revived concerns about the economy and oil demand.
Friday's slide snapped a three-day string of higher closes,
but for the week oil prices still managed a 3.17 percent rise
thanks to the mid-week winning streak.
Prices fell sharply after the U.S. Commerce Department
reported that total retail sales fell 1.2 percent in May after
April's upwardly revised 0.6 percent rise. It was the first
decline since September. []
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. []
"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 raise interest rates and let
the yuan strengthen. []
U.S. crude for July <CLc1> fell $1.70, or 2.25 percent, to
settle at $73.78 a barrel, trading from $73.26 to $75.64.
ICE Brent <LC0c1> fell 94 cents to settle at $74.35, but
ended up 4.6 percent on the week.
Recent record high crude oil stockpiles at the Cushing,
Oklahoma, delivery point for U.S. benchmark crude, have helped
keep U.S. front-month crude priced below the next month's
contract <CL-1=R> and at a discount to the London Brent crude
contract <CL-LCO1=R>.
"The front (spread) stretched back out more than $1.50 a
barrel today, a possible signal of a renewed build in Cushing
supply in next week's data," Jim Ritterbusch, president at
Ritterbusch & Associates said in a research note.
Cushing inventories rose 111,186 barrels in the week to
June 8, to a record 40 million barrels, energy industry data
provider Genscape said on Thursday. []
The U.S. retail sales report initially weighed on the stock
market, but the better-than-expected read on consumer sentiment
and strong technology sector lifted the Nasdaq and the stock
market ended higher. []
The consumer sentiment report helped the dollar strengthen
against the yen and euro. []
A stronger dollar can pressure oil by making it more
expensive for consumers using other currencies and also pulling
investors from energy into foreign exchange markets.
Most analysts expect 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 higher in a report on Thursday, adding
to the bullish sentiment in the market after Wednesday's
government oil inventory report showed lower crude stockpiles.
But Friday's data showing China's industrial output slowed
in May fueled concerns about slowing economic growth.
[]
UAE Oil Minister Mohammed al-Hamli told Reuters at a
Beijing conference on Friday that oil markets were still
oversupplied but not excessively and that a $70 to $80 per
barrel price range was acceptable. []
Prices are 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 Lisa Shumaker)
