Oil falls to $70 as euro sinks to 4-year low

14:09, May 17, 2010


Oil prices dropped to near US$70 a barrel on Monday in Asia as the euro sank to a four-year low and stock markets tumbled on investor concern Europe's economy will wither amid a debt crisis and fiscal austerity measures.

Benchmark crude for June delivery was down $1.35 to $70.26 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.

Crude fell as low as $69.82, the lowest since $69.59 on February 5, as the U.S. dollar gained against the beleaguered euro, which was at a four year-low. Oil, which is priced in dollars, becomes more expensive to investors holding other currencies when the dollar advances.

The euro fell to $1.2275 on Monday from $1.2352 on Friday.

Asian stock markets also plunged Monday, and oil investors often look to equities as a sign of overall investor confidence.

An hour before Shanghai's stock market closes at 3 p.m. local time, the benchmark index lost more than 100 points, or nearly 4 percent, as investors were worried about a bleak situation in Europe, and a possible economic slowdown at home.

"It's a sea of red out there," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "The euro concerns have really impacted confidence among investors across markets."

People's Daily Online / Agencies