* WTI contango biggest in 15 months, seen growing -analysts
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GMT
* For a technical view, click: []
By Alejandro Barbajosa
SINGAPORE, May 14 (Reuters) - U.S. crude oil tumbled for a
fourth straight session on Friday, within cents of three-month
lows below $74, on concern that the European debt crisis will
curb global growth and energy demand.
A stronger dollar on Friday also reduced the purchasing
power of other currency holders for oil.
And brimming crude stockpiles at the Cushing, Oklahoma
pricing point for Americas benchmark West Texas Intermediate
are exercising pressure on contracts closest to delivery,
creating the sharpest contango market structure in 15 months.
For a graphic showing the WTI contango:
http://graphics.thomsonreuters.com/gfx/AB_20101405104110.jpg
"The European debt crisis has made us question the growth
outlook for the global economy and therefore fuel demand," said
Toby Hassall, an analyst at CWA Global Markets in Sydney.
"We've got record stockpiles at Cushing and that is
certainly weighing on the nearby contracts for crude, but the
macro sentiment is playing a role as well. We have seen an
increase in risk aversion across equities and some commodities
markets."
U.S. crude for June delivery <CLc1> declined 66 cents to
$73.74 a barrel at 0317 GMT, after touching an intraday trough
of $73.62 on Thursday, the lowest price for a front-month
contract since Feb. 12.
Rising global energy demand and hopes Europe can control
the continent's debt crisis have supported ICE Brent crude.
While WTI has dropped every day this week except Monday to
post a second consecutive weekly decline, European benchmark
ICE Brent <LCOc1> was poised to end the week higher, despite a
fall of 34 cents to $79.77 on Friday, when the June contract
expires.
"In the longer term term, the bias for crude oil is to the
upside," Hassall said. "We did a significant response from
European policymakers at the beginning of this week, and the
market is still digesting what the effect will be."
Oil posted sharp gains on Monday following the announcement
of a rescue package of almost $1 trillion, led by the European
Union and the International Monetary Fund for debt-laden
European economies.
But declines in Asia shares contributed to lower oil prices
on Friday. Japan's Nikkei average fell 1.6 percent, dragged
down by a tumble in Sony Corp <6758.T> after its profit
forecast fell short of expectations.
WTI DISLOCATION
Analysts say the discount of front-month WTI to the second
month contract may continue to widen as Cushing stockpiles
continue to grow, extending last week's record of 37 million
barrels. []
This means the so-called dislocation of WTI would increase,
rendering the U.S. benchmark price less useful as a gauge of
the global supply and demand balance.
Tanks at Cushing, where WTI is priced, store flows of
Canadian crude imported by pipeline. The hub is isolated from
crude terminals in the Gulf of Mexico, where the U.S. receives
shipments from the Middle East, Latin America and Europe.
"The U.S. market at Cushing is near tanktops," said Tony
Nunan, a risk manager with Tokyo-based Mitsubishi Corp. "To
track the global market Brent is better now."
Industry data provider Genscape on Thursday said Cushing
stockpiles rose by 1.2 million barrels to a fresh record 38.96
million barrels in the week to May 11. The build brought
inventories to what experts say is the delivery hub's operating
capacity. []
Total operational capacity for oil storage is traditionally
around 80-90 percent of Cushing's shell capacity, according to
industry experts.
(Editing by Ed Lane)
