Crude falls $2/bbl on mounting economic worries

25 May 2010 08:44  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude futures fell by more than $2/bbl on Tuesday as the US dollar strengthened amid growing concerns over oil consumption, with the global economic recovery being threatened by the European debt crisis.

At 07:08 GMT, July NYMEX light sweet crude futures were down $1.79/bbl at $68.42/bbl (€54.74/bbl) after hitting an intra-day low of $68.05/bbl.

Meanwhile, July Brent on London’s ICE futures fell $1.63/bbl to $69.54/bbl, after hitting a session low of $69.15/bbl – the lowest intra-day level hit since early February.

The US dollar gained ground against the euro and other leading currencies as investors sought a safe haven amid the growing market fears.

Asian equity markets tumbled on Tuesday, with the benchmark Nikkei 225 stock index in Japan declining by more than 3%.

US inventory data due for release later this week is expected to reveal a further build in crude stocks at the key Cushing terminal in Oklahoma to new record levels.

Data from the previous week showed a build-up of crude at Cushing to a new crude level of 37.9m barrels.

However, overall US crude stocks were expected to fall due to reduced imports.

The landlocked Cushing terminal is the delivery point of WTI and the increase in stocks has placed significant downward pressure on the grade and pushed prices below ICE Brent values.

($1 = €0.80)

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By: James Dennis
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