US crude oil fell more than 3 percent to a three-month low below $72 a barrel on Friday, on concerns the European debt crisis could curb energy demand growth with US crude inventories already swollen. The euro lost more ground to trade below $1.24 as European Central Bank policymaker Axel Weber said dangers still lurk in the financial system and should not be underestimated.
-- US crude stockpiles at Cushing at record high
US stocks also tumbled on the eurozone debt concerns, while Visa and MasterCard led the financial sector lower after the US Senate backed limits on card fees. "Crude futures are down as people are realising that the eurozone debt troubles may not only be regional in scope but global as well and that could harm world economic growth," said Rich Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.
US crude for June delivery fell $3.05, or 4.1 percent, to $71.35 a barrel by 12:30 pm EDT (1630 GMT), after falling as low as $71.05. the lowest price for a front-month contract since prices fell to $70.77 on February 8. Prices briefly pared losses after US retail sales and industrial output for April rose more than expected, but then resumed their decline.
ICE Brent June futures were down $2.79 at $77.32 a barrel on the day the contract expires. Stockpiles of crude at Cushing, Oklahoma, the delivery hub for the US contract's benchmark crude, have risen the last eight weeks to a record 37 million barrels, pushing front-month US crude down relative to both more distant futures contracts and the alternative global crude benchmark, Brent.
The spread between front-month US crude prices and longer-dated futures, known as the contango, was the widest it has been in nearly 15 months. The US benchmark West Texas Intermediate is also trading close to the deepest discount to Brent since February 2009, although this narrowed slightly on Friday due to the Brent June expiry.
"The specter of large crude oil inventories seems to be weighing on markets much more than before, and has been instrumental in pressuring prices, widening the contangos and contributing to Brent's expanding premium over WTI," said Edward Meir of MF Global. The International Energy Agency this week trimmed its 2010 global oil demand forecast by 50,000 barrels per day to 1.62 million bpd.
It said the Greek debt crisis could dent oil consumption if it spreads to other countries such as Spain, Portugal and Italy. This contrasted with the raised 2010 demand growth forecasts from the Organisation of the Petroleum Exporting Countries and US Energy Information Administration.
On Monday, oil rose sharply following announcement of a rescue package of almost $1 trillion, led by the European Union and the International Monetary Fund for debt-laden European economies. During Monday's trading session oil was up more than $3 from the previous close at an intraday high of $78.51 a barrel but the market has since reversed, falling in the three subsequent sessions and now on track to fall for a fourth.