Crude’s early gains evaporate as oil falls with declining euro, stock markets

Oil gives up early gains, heads down again

It looked for a while on Tuesday that the two-week slide in oil prices that dragged crude down to its lowest price of the year would end. It didn’t.

Benchmark crude for June delivery fell 54 cents to settle at $69.41 a barrel on the New York Mercantile Exchange. That’s the lowest settlement since Sept. 29, when crude settled at $66.71. Oil was as high as $72.52 earlier in Tuesday’s session.

Analysts say fresh worries about the European debt crisis and the declining euro pulled the rug out from Tuesday’s early rally. The question now is whether the slide will continue, or if prices will rise again. Twice since January oil prices approached $90 a barrel only to slide back to $70. Crude has dropped more than 20 percent after hitting $87.15 a barrel on May 3, the highest point since October 2008.

“It’s premature to say we’ve placed the lows,” said Jim Ritterbusch of Ritterbusch and Associates, an energy consulting firm.

Oil analyst and trader Stephen Schork said prices could drop into the mid-$60s

A drop in the euro against the dollar also has made oil a less appealing investment overseas. Crude is priced in dollars, so oil becomes more expensive for holders of other currencies when the dollar goes up. Analysts are concerned that the debt crisis could slow European economies and drag down demand for oil.

Lower stock prices pulled oil prices down as well. The Dow Jones Industrial Average closed down about 115 points. The NASDAQ and the S&P 500 were lower as well.

Meanwhile, falling oil prices are slowly making their way to the gas pump. Retail gasoline prices fell 0.8 cent to a national average of $2.859 per gallon, according to AAA, Wright Express and Oil Price Information Services. On May 6 the national average was $2.929 a gallon. Pump prices have dropped by 4.2 cents over the past week, but are still 54.8 cents above year-ago levels.

The oil spill in the Gulf of Mexico has not interfered with tankers carrying imported oil to Gulf ports or those taking refined products from there to other parts of the country. There is concern though that the spill could eventually slow shipments if vessels must be scrubbed of oil before they reach port, but crude prices have not been affected yet.

In other Nymex trading in June contracts, heating oil fell 2.37 cents to settle at $1.9615 a gallon. Gasoline settled unchanged at $2.0431 a gallon. Natural gas gave up 5.6 cents to settle at $4.342 per 1,000 cubic feet.

In London, the Brent crude July contact dropped 67 cents to settle at $74.43 on the ICE futures exchange.

Associated Press writers Pablo Gorondi in Budapest and Alex Kennedy in Singapore contributed to this report.