* Oil down to lowest since Feb. 5
* Euro hit four-year low, strong dollar pressures oil
* High U.S. oil inventories weigh
* For a technical view, click: []
(Adds graphics, updates prices)
By Judy Hua
SINGAPORE, May 17 (Reuters) - Oil fell below $70 a barrel
on Monday, to its lowest in more than three months, extending a
loss of nearly 17 percent over the past two weeks on fears over
Europe's debts, the weak euro and swollen U.S. oil inventories.
The euro sank to four-year lows as angst over Europe's debt
crisis led investors to pull more money from stocks in favour
of havens such as gold and Asian bonds. []
U.S. crude for June delivery <CLc1> fell more than $1.00 on
Monday to as low as $69.82 a barrel, its weakest since Feb. 5.
It was trading at $70.00 by 0645 GMT, down $1.61.
The contract settled down $2.79 on Friday, bringing a
two-week tumble to $14.54, or 16.9 percent, the biggest
two-week percentage loss since the period ending Jan. 16, 2009.
The contract is expected to face volatility ahead of
Monday's June crude options expiry and the May 20 June crude
contract expiry.
London Brent crude <LCOc1> dropped $1.39 to $76.54 a
barrel.
"At the moment all of the markets are on the way of
declining further on the euro crisis. I think euro against
dollar is possibly to go down to about $1.20, triggering
another round of rectification in the market," said Ken
Hasegawa, a commodity derivatives manager at brokerage Newedge
in Japan.
"Inventories of crude oil and oil products have increased
in recent weeks and that's another factor of the bearish mood
in the market. Inventories are likely to increase again this
week," he added.
Stockpiles of crude at Cushing, Oklahoma, the delivery hub
for the U.S. contract's West Texas Intermediate benchmark
crude, have risen in the last eight weeks to a record high 37
million barrels, pushing front-month U.S. crude down relative
to both more distant futures contracts and the alternative
global crude benchmark, Brent.
Qatar expects further pressure on oil prices from the
uncertainty engendered by the European debt crisis, its oil
minister said on Saturday.
"The oil price is not reflective of demand and supply, but
psychological (factors) and uncertainty, especially in Europe
(and due to the Greece) bailout," Abdullah bin Hamad al-Attiyah
told reporters.
"All this put a lot of pressure on the world economy and
the oil price," he said. []
The tense mood also hammered Asian stocks on Monday.
Japan's Nikkei <> shed 2.2 percent, South Korea's stock
index <> lost 2.6 percent and Hong Kong's Hang Seng Index
<> fell 2.6 percent.
But the dollar <.DXY> rose 0.69 percent against a basket of
currencies. Gold priced in sterling hit an all-time high at 867
pounds on Monday after the British currency struck a fresh
one-year low against the dollar. []
A strong U.S. currency makes dollar-denominated
commodities, such as oil, more costly for holders of other
currencies and tends to damp prices.
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^ For the correlation between oil and dollar, click::
http://graphics.thomsonreuters.com/gfx/RSW_20101705111917.jpg
For a graphic of the oil technical outlook, click:
http://graphics.thomsonreuters.com/gfx/CT_20101705092746.jpg
For a graphic on Brent premium to WTI, click
http://graphics.thomsonreuters.com/gfx/NT_20101705143411.jpg
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^ (Editing by Ed Lane, Himani Sarkar)
