* Bearish oil market fundamentals weigh on prices
* Oil futures drop even as stocks rise, euro firms
* Front-month U.S. crude falls most on Cushing, OK glut
* Coming up: US CFTC weekly report on oil positions
(Recasts, adding details and comments throughout)
NEW YORK, May 21 (Reuters) - Oil prices fell on Friday as
increasing stockpiles of crude and oil products in the United
States undercut the economic optimism that boosted equities
markets.
Front-month U.S. crude futures <CLc1> fell 76 cents to
settle at $70.04 a barrel, erasing gains from earlier. Crude
prices have fallen in eight of the last nine trading days, and
have plunged from a 2010 high near $90 a barrel in early May.
London Brent crude <LCOc1> closed down 16 cents at $71.68 a
barrel.
"The lesson here is that fundamentals matter," said Tim
Evans of Citi Futures Perspective in New York. "The decline in
crude prices highlights an underlying fundamental weakness."
U.S. crude inventories rose in 15 of the 16 weeks through
May 14, according to weekly data from the U.S. Energy
Information Administration. EIA data also shows stocks at
Cushing, Oklahoma, the delivery point for NYMEX crude futures,
at record levels, while U.S. gasoline stocks are nearly 9
percent higher than year-ago levels.
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Factbox on oil's choppiest sessions: []
Technical chart: http://link.reuters.com/wav65k
Reuters Insider: Crude contango still in play
http://link.reuters.com/fum65k
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The bearish fundamentals in oil markets helped push crude
prices lower even as economic optimism helped to boost U.S.
equities, with the Dow Jones and S&P 500 indices rising more
than 1 percent. []
The dollar weakened against a basket of foreign currencies
<.DXY> and the euro strengthened.
Equities and the euro firmed as worries ebbed over the
sovereign debt crisis in Europe and an overhaul of U.S.
financial regulation. The U.S. Senate voted to approve broad
financial reforms on Thursday.
"Crude is demonstrating it can step away from some of the
influence of other financial markets because we haven't seen a
big rebound in fuel demand and inventories are sizable," said
Gene McGillian of Tradition Energy in Stamford, Connecticut.
Royal Dutch Shell <RDSa.L> on Friday lifted its force
majeure on shipments of Nigeria's Bonny Light crude, indicating
that supply from the top African crude exporter may rise,
following restrictions since early May, after leaks and fires
on a pipeline. []
"That means we are no longer dealing with a major supply
disruption," said Evans.
U.S. NYMEX crude for July delivery <CLc1> fell most sharply,
with European Brent crude dipping 36 cents to $71.34 as of 2:43
p.m. EDT. Front-month NYMEX futures have been hit hard by
record inventories at the landlocked Cushing delivery point.
Cushing stocks rose by 500,000 barrels in the week through
May 18 to a record 39.46 million barrels, data from industry
tracker Genscape showed on Thursday. []
U.S crude has dropped sharply this month on waning
confidence in global markets due to the crisis in the euro zone
triggered by Greece's debt problems.
(Reporting by Joshua Schneyer, Robert Gibbons, Gene Ramos and
Matthew Robinson in New York; Florence Tan in Singapore and
Ikuko Kurahone in London; Editing by Lisa Shumaker)
