* WTI contango biggest in 15 months, seen growing -analysts
* For a technical view on oil prices, click:
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* Coming up: US retail sales, 1230 GMT; Ind output, 1315
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(Updates prices)
By Alejandro Barbajosa
SINGAPORE, May 14 (Reuters) - U.S. crude oil tumbled to a
three-month low below $74 on Friday on concerns that the
European debt crisis would curb global growth and energy
demand.
Brimming crude stockpiles at the Cushing, Oklahoma, pricing
point for Americas benchmark West Texas Intermediate are also
exerting pressure on contracts closest to delivery, creating
the sharpest contango market structure in 15 months.
For a graphic of the WTI contango, click:
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 as much as 78
cents to $73.62 a barrel, replicating Thursday's trough, the
lowest price for a front-month contract since Feb. 12. It was
down 55 cents at $73.85 by 0700 GMT.
Although the U.S. price has dropped more than $13 from a
19-month high above $87 on May 3, rising global oil demand led
by emerging economies has supported ICE Brent crude.
WTI has dropped every day this week except Monday to rack
up a second consecutive weekly decline. But European benchmark
ICE Brent <LCOc1> was poised to end the week higher, despite a
fall of 23 cents to $79.88 on Friday, when the June contract
expires.
"In the longer term, the bias for crude oil is to the
upside," Hassall said. "We did see 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 1.5 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 tank tops," 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.
Saudi Arabia, Kuwait and Iraq have over the past six months
stopped using WTI as the reference price for crude sales to the
U.S. because of the grade's frequent disconnection with global
oil markets, which generally implies lower prices.
They have switched marker to the Argus Sour Crude Index
(ASCI), which is composed of Mars, Green Southern Canyon and
Poseidon crudes produced in the Gulf of Mexico.
With the dollar little changed against a basket of
currencies, the market's attention was set to turn to U.S.
economic indicators to be published later on Friday, including
industrial production and retail sales for April.
"The market is going to be looking for further indications
that the U.S. economic recovery is becoming self sustaining,"
Hassall said. "The prospects for economic recovery obviously
have important implications for the crude market."
(Editing by Ed Lane)
