Oil falls to near $72 as stocks, euro fall

[June 01, 2010]  SINGAPORE (AP) -- Oil prices tumbled to near $72 a barrel Tuesday in Asia as weakness in global stocks and the euro dragged on appetite for crude.

Benchmark crude for July delivery was down $1.51 at $72.46 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract last settled down 58 cents at $73.97 on Friday because markets in the U.S. were closed Monday for the Memorial Day holiday.

Crude traded as high as $75.17 a barrel in Europe on Monday.

Oil has fallen from $87 early last month amid investor concern a debt crisis in Greece could spread to other European countries and hurt the global economy recovery.

Stock markets in Europe and Asia slid Tuesday and the euro fell to $1.2174 from $1.2304 on Monday. Oil traders often look to equities as a barometer of overall investor sentiment, and dollar-based commodities such as oil become more expensive for investors holding the European currency when the dollar gains.

Some analysts expect strong economic growth in Asia and the U.S. will more than offset a sluggish recovery in Europe and help bolster crude demand this year.

"A Greek economic slowdown has minimal effect on global oil demand growth, and thus, the crude price seems oversold," Melbourne-based ANZ bank said in a report. "Nevertheless, continued uncertainty over the Euro-zone will threaten investors' confidence on risky assets and weigh on oil prices."

The euro will likely drop to $1.15 by year-end while oil will probably trade between $75 and $80 at the end of the year, said Jorg Zuener, chief economist for Liechtenstein-based VP Bank.

In other Nymex trading in June contracts, heating oil fell 1.39 cents to $1.9906 a gallon and gasoline dropped 1.72 cents at $2.0094 a gallon. Natural gas was down 2.1 cents at $4.320 per 1,000 cubic feet.

In London, the Brent crude July contact was down $1.95 to $72.70 on the ICE futures exchange.

[Associated Press; By ALEX KENNEDY]

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