* Oil doubles earlier losses in mid-afternoon sell-off
* Stocks lead retreat, Dow down more than 9 pct at worst
* Dealers see wave of 'panic' selling, volume near record
* Greece contagion fears still weigh on financial markets
* Coming up: US nonfarm payroll, jobs data, Friday morning
(Releads, updates prices, market activity)
By Gene Ramos
NEW YORK, May 6 (Reuters) - U.S. oil prices dived more than
5 percent in a blitz of risk-retreat selling on Thursday, a
third day of heavy losses across financial markets amid growing
fears that the Greek debt crisis could engulf other economies.
After trading in close tandem with the falling euro through
the day, prices suddenly deepened their losses mid-afternoon,
just as the dollar made new highs against a range of currencies
and U.S. stock markets collapsed amid the heaviest trading
volume since last May, with the Dow down as much as 9 percent.
Dealers were hard-pressed to identify a trigger for the
widespread move, which also lifted spot gold prices to above
$1,200 an ounce to their highest in five months, but said it
appeared to be traders rapidly unwinding risk trades to seek
safer havens.
"This looks like a massive liquidation of risk assets
across markets. Selling seems to have built on itself and
reached a panic," Peter Beutel, Cameron Hanover, New Canaan,
Connecticut.
"We had this huge appetite going for risk assets ever since
March of 2009, and it has been fading, starting slowly a few
days ago and then really taking off this afternoon."
After plunging as low as $74.58 a barrel, its weakest since
mid-February, June U.S. crude futures <CLc1> later recovered
some of their losses to fall $3.87 to $76.10 by 1913 GMT.
London Brent crude <LCOc1> fell $3.73, or 4.5 percent, to
$78.88.
It was a third day of heavy losses for oil prices, taking
this week's losses to more than 10 percent, punished both by
anxiety over the euro zone, as well as data showing rising U.S.
crude inventories as a demand rebound fails to materialize.
Even after Greek lawmakers approved an austerity bill that
would open the door to a record bailout, doubts persisted over
Greece's ability to carry out tough spending cuts in return for
a 110 billion euro aid package from the European Union and the
International Monetary Fund. []
The European Central Bank left monetary policy unchanged on
Thursday, failing to convince investors that it will be able to
prevent a debt crisis in the euro zone. []
The euro tumbled to a 14-month low against the dollar after
the ECB's failure to offer any additional measures to ease
Greece's predicaments. [] Risk averse investors are pulling
out of equities and commodities and instead putting their money
into the dollar.
The crisis of confidence in euro-zone economies and the
latest U.S. economic data stoked further worries that global
energy demand could be hard hit, just as signs of recovery are
emerging, particularly in the United States, the world's
largest energy consumer.
"The crumbling euro is making a very blatant statement
about the concern investors have about the (European) Union's
economic prospects ... more immediately, how is energy demand
going to expend," said Mike Fitzpatrick, vice president for
energy at MF Global in New York.
The contango, or discount for the prompt NYMEX price to the
following month, has widened in recent weeks as crude oil
stored at the Cushing, Oklahoma, delivery hub for the NYMEX
contract, has grown to a record 36.2 million barrels in the
week to April 30, U.S. government data showed.
Stocks there continued to climb this week. Industry data
provider Genscape reported that oil inventories at the hub rose
990,795 barrels to a record 37.8 million barrels in the week to
May 4. []
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For a chart on the 2010 performance of commodities, see:
http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
For a technical chart, see:
http://graphics.thomsonreuters.com/gfx/WT_20100605084529.jpg
For a graphic on the oil to dollar correlation, click:
http://graphics.thomsonreuters.com/gfx/RSW_20100605144040.jpg
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(Additional reporting by Robert Gibbons and Joshua Schneyer in
New York, Joe Brock in London, and Florence Tan in Singapore;
editing by Marguerita Choy)
