Oil falls below $73 amid sliding stock markets

[February 05, 2010]  SINGAPORE (AP) -- Oil prices fell below $73 a barrel Friday in Asia after a major sell-off the previous day as investors dumped stocks and commodities amid doubts about the global economic recovery.

Benchmark crude for March delivery was down 38 cents at $72.76 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $3.84 to settle at $73.14 on Thursday, the biggest one-day drop in four months.

Global stock markets slumped amid concerns about high debt levels in Greece, Portugal and Spain and high unemployment in the U.S. Oil traders often look to stock markets as a measure of overall investor sentiment.

The Dow Jones industrial average slid 2.6 percent Thursday and all major Asian indexes fell on Friday. Japan's Nikkei 225 index skidded 2.9 percent.

Crude investors are also watching the dollar since they often buy commodities such as oil as a hedge against inflation and sell when the U.S. currency strengthens.

The euro fell to $1.3664 on Friday from $1.3726 on Thursday while the dollar rose to 89.45 yen from 89.00 yen.

"The equities and energy markets heard reality calling," Michael Sander of Seattle-based Sander Capital Advisors said in a report. "With the dollar showing extreme strength and equity markets consolidating, I still think oil could trade down to $70.

In other Nymex trading in March contracts, heating oil was down 2.5 cents at $1.91 a gallon, and gasoline fell 2.3 cents to $1.928 a gallon. Natural gas rose 1.2 cents to $5.428 per 1,000 cubic feet.

In London, Brent crude was down 60 cents at $71.53 on the ICE futures exchange.

[Associated Press; By ALEX KENNEDY]

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