Oil pares losses, above $70; euro zone woes linger

Oil pares losses, above $70; euro zone woes linger

Singapore: US oil prices pared sharp losses to trade above $70 on Friday, soothed by a recovery in regional equity markets, but fears about Europe’s debt crisis kept the market on track for its eighth fall in nine sessions.

China’s shares rebounded from a one-year intraday low, as bargain hunting in property shares helped offset uncertainties spurred by the European debt crisis. Sydney’s ASX 200 ended down 0.26% after dipping as much as 3.3%.

US crude for July delivery fell 72 cents to $70.10 a barrel by 0745 GMT, recouping some of its losses from earlier in the day. On Thursday, trade in the June contract saw the largest intraday move of around $7 since the end of 2008, tumbling nearly 3% on its expiration.

London Brent crude was down 31 cents at $71.50 a barrel.

The 19-commodity Reuters-Jefferies CRB index, a global commodities benchmark, fell 1.02% on Thursday to stand at its lowest level since September.

“There are signs that the economy may not be as strong as initially believed," Peter Beutel of trading advisory Cameron Hanover said in a note. “Thursday’s (US) employment figure was disappointing, and more and more observers are talking about a second dip, now."

Tension between France and Germany over a unilateral German ban on some speculative trades on Wednesday and fears that Germany may force out weaker euro zone members rattled world markets, and kept investors on edge.

“It’s like the UN, you can’t get anything concrete done. The only thing keeping them on the same page is to prevent a total collapse of the euro," said Clarence Chu, trader at Hudson Capital.

The market will be watching for the German parliamentary vote on the country’s contribution to the European Union/International Monetary Fund support package later on Friday, he said.

Oil came under further pressure after industry data provider Genscape said late on Thursday that oil inventories at the key US Cushing, Oklahoma crude oil hub rose by 500,000 barrels in the week to 18 May, to 39.46 million barrel.

The U.S. Energy Information Administration on Wednesday reported that stocks at the Cushing delivery point rose 900,000 barrels to a fresh record 37.9 million barrels in the week to 14 May.