* U.S. jobless claims rise unexpectedly
* Euro near four-year lows versus dollar
* Coming up: U.S. April leading indicators; 1400 GMT
(Updates prices, adds jobs data, graphic)
By Emma Farge
LONDON, May 20 (Reuters) - Oil fell towards $68 a barrel on
Thursday, the lowest level in nearly eight months on concerns
that the European debt crisis will cut both risk appetite and
demand for oil.
Worries that the Greek fiscal problems could spill over to
other economies has knocked oil prices down by around $20 from
the $87.15 a barrel peak in early May.
Oil extended early losses on Thursday after U.S. jobless
claims rose unexpectedly and global stocks slid lower.
[] []
"The fiscal crisis in Europe has been an eye-opener for
markets. Even though we have a recovery, it's clear that it will
be slow and painful and it's the same for oil demand," said
Christophe Barret, oil analyst at Credit Agricole CIB.
U.S. crude <CLc1> for June delivery fell $2.15 to $67.72 a
barrel by 1243 GMT, falling below the near eight-month low hit
the previous day. It earlier rose more than $1 as traders rushed
to cover short positions ahead of the contract's expiry today
before again falling sharply.
The July contract fell $2.44 to $70.04 a barrel by the same
time. ICE Brent futures <LCOc1> were down $2.42 at $71.27 a
barrel.
The euro traded near four-year lows against the dollar on
Thursday as uncertainty over unity in the euro zone prevailed
following Germany's solitary move to ban naked short-selling on
Wednesday. [] <EUR=>
A weak euro tends to weigh on oil prices as it makes
dollar-denominated commodities more expensive for holders of the
currency.
The German ban has also curbed buying appetite for
commodities such as oil amid concern other eurozone members will
follow and is contributing to the price slide, analysts said.
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For a chart on the returning oil/dollar correlation with
Europe risk, click:
http://graphics.thomsonreuters.com/gfx/RSW_20101905125817.jpg
For a chart showing the performance of commodities including
oil so far this year, click:
http://graphics.thomsonreuters.com/gfx/CMD_CRB200510.gif
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BELOW RANGE
Oil prices this week have fallen below the $70-$80 a barrel
range that many members of the Organization of the Petroleum
Exporting Countries (OPEC) have said is fair for both producers
and consumers.
But OPEC officials have stopped short of calling for any
immediate steps to prop up the market. []
Some analysts attribute the weakness of U.S. crude partly to
a regional supply glut at the Cushing delivery point for West
Texas Intermediate (WTI) where stocks are at a record high of
37.9 million barrels.
The sell-off in the alternative global oil benchmark ICE
Brent has been less pronounced than on WTI and the spread
between the two contracts was around $3 on Thursday, with Brent
at a premium.
Oil prices briefly rallied on Wednesday after U.S. weekly
inventory data showed a smaller-than-expected 200,000 barrel
rise in crude stocks.
The data also showed a surprise decline in distillates and a
smaller than forecast drop in gasoline, stirring hopes that fuel
demand in the number one oil consumer is improving. []
Oil demand is historically weakest in the second quarter
between the northern hemisphere winter heating oil season and
the summer gasoline season.
Key macroeconomic data due out of the U.S. later on Thursday
including leading indicators for April at 1400 GMT are set to
provide further market direction, analysts said.
Eurozone consumer confidence data could also give prices a
steer, they added.
(Additional reporting by Judy Hua in Singapore; editing by
James Jukwey)
