Oil falls to near $76 a barrel as traders eye euro

[May 11, 2010]  SINGAPORE (AP) -- Oil prices fell to near $76 a barrel Tuesday in Asia after investor euphoria over a $1 trillion European debt bailout evaporated and the euro weakened.

Benchmark crude for June delivery was down 63 cents to $76.17 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The June contract rose $1.69 to settle at $76.80 on Monday.

Oil is down from an 18-month high of $87.15 a barrel early last week as the European debt crisis undermined investor confidence in the euro. Commodities priced in dollars, such as oil, become more expensive for investors holding euros as the U.S. currency strengthens.

Crude rebounded Monday after the European Union Commission and International Monetary Fund pledged a loan package of euro750 billion ($975 billion) to defend the common currency, but closed off its high of $78.51 as the euro gave back some of its gains.

The euro fell to $1.2748 on Tuesday from $1.2790 on Monday while the dollar fell to 92.52 yen from 93.29 yen.

Some analysts expect the bailout to temporarily stabilize European bond prices but eventually weaken the euro and weigh on oil prices.

"While the euro-zone support plan appears sufficient to forgo any contagion for now, additional weakening in the euro should eventually spill over" into oil prices, Ritterbusch and Associates said in a report.

In other Nymex trading in June contracts, heating oil rose 0.79 cents to $2.1123 a gallon, and gasoline slid 0.54 cent to $2.1672 a gallon. Natural gas was steady at $4.170 per 1,000 cubic feet.

In London, Brent crude was down 50 cents to $79.62 on the ICE futures exchange.

[Associated Press; By ALEX KENNEDY]

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