By Grant Smith
(Bloomberg) -- Crude oil fell for a fifth day in New York on concern Europe’s sovereign-debt crisis may derail the global economic recovery and reduce fuel consumption.
Oil entered its longest losing streak in five weeks as the euro extended losses against the dollar, damping the investment appeal of commodities. Qatar’s Energy Minister Abdullah al- Attiyah said on May 15 that this month’s price tumble is being driven by Europe’s debt crisis and is beyond the influence of the Organization of Petroleum Exporting Countries.
“The pressure on oil prices is still macro-driven, with attention on the problems in Greece and what this means for the broader economy,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. “But we may have overshot to the downside, and if we see risk aversion abate in the equity market, oil could be set for some recovery.”
Crude oil for June delivery fell as much as $1.79, or 2.5 percent, to $69.82 a barrel in electronic trading on the New York Mercantile Exchange. That’s the lowest price since Feb. 5. The contract was at $71.01 at 1:30 p.m. London time. Brent crude oil for July delivery fell 59 cents to $77.34 on the London- based ICE Futures Europe exchange.
The euro dropped to the lowest against the dollar in more than four years, amid speculation European measures to reduce fiscal deficits will undermine the region’s recovery. The 16- nation currency reached $1.2235, the weakest since April 2006, from $1.2358 on May 14 in New York.
Oil has lost a fifth of its value since reaching $87.15 a barrel on May 3, a 19-month high, as the euro’s decline curbed investor demand. Futures have lost 12 percent so far in 2010.
“There are concerns that the European debt crisis will have a negative impact on the global growth outlook and in turn, global fuel demand,” said Toby Hassall, research analyst at CWA Global Markets Pty in Sydney. “We’re seeing an increase in risk aversion, which in turn has put upward pressure on the dollar.”
Saudi Arabia’s Oil Minister Ali al-Naimi said last month prices in the range of $70 to $80 a barrel are “as close to perfect as possible.” King Abdullah has targeted $75 as a fair price for consumers and producers. OPEC, which pumps 40 percent of the world’s oil, is scheduled to meet Oct. 14 in Vienna.
“If oil prices go below $70 and there is momentum going toward the mid-$60s, that’s going to raise the pulse of the members of OPEC and that may prompt OPEC to cut supply,” said Victor Shum, senior principal with U.S. energy consultants Purvin & Gertz Inc. “OPEC can stop a price slide better than stop a price surge.”
New York futures have also been depressed by rising stockpiles in the U.S., the world’s biggest energy consumer, according to CWA’s Hassall. A widening discount, or contango, from the front-month contract favors the storing of supplies.
U.S. crude oil inventories increased in 14 of the past 15 weeks as refiners cut processing rates, the Energy Department said May 12. Stockpiles at Cushing, Oklahoma, where New York- traded West Texas Intermediate oil is delivered, rose to a record high of 37 million barrels.
Hedge-fund managers and other large speculators reduced their bets on rising oil prices to a two-month low last week, U.S. Commodity Futures Trading Commission data showed.
Speculative net-long positions, the difference between orders to buy and sell the commodity, fell 15 percent to 92,895 contracts on the New York Mercantile Exchange in the week ended May 11, the commission said May 14.
--With assistance from Gavin Evans in Wellington, Ann Koh and Yee Kai Pin in Singapore, and Paul Gordon in Hong Kong. Editors: John Buckley, Rob Verdonck
To contact the reporters on this story: Grant Smith in London at firstname.lastname@example.org
To contact the editor responsible for this story: Stephen Voss on email@example.com