Oil falls to near $72 in Europe as investor optimism wanes about stocks, commodities

Oil near $72 as economy concerns drag on optimism

Oil prices slipped to near $72 a barrel Wednesday as flagging investor optimism about the global economy dragged down stocks and commodities.

By early afternoon in Europe, benchmark crude for July delivery was down 38 cents at $72.20 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.39 to settle at $72.58 on Tuesday.

Equity markets and oil prices have been battered for the last month amid fears Europe’s debt crisis could spread and slow global economic growth. The Dow Jones industrial average fell 1.1 percent Tuesday while Asian stocks were mixed and European markets all down on Wednesday.

The dollar continued to stay strong against the euro, making oil more expensive for investors holding the common European currency.

The euro was down to $1.2211 on Wednesday from $1.2253 late Tuesday in New York, but well above the low of $1.2112 it hit earlier in Tuesday’s session.

“Crude oil prices remain quite sensitive to any fundamentals and macroeconomic figures,” said a report from Sucden Financial in London. “It is risk aversion and negative sentiment that currently weigh heavily on the energy market.”

Oil traders, who often look to stock markets as a measure of overall investor sentiment, will be eyeing weekly U.S. crude inventory data and a monthly jobs report later this week for clues about the strength of the economy and consumer demand.

“I can think of no reason for the price of oil to rally at this point,” said Mike Sander of Sander Capital Advisors in Seattle. “The outlook for equities and commodities for now looks bleak.”

In other Nymex trading in July contracts, heating oil fell 0.54 cent to $1.9650 a gallon and gasoline lost 0.34 cent at $1.9791 a gallon. Natural gas was up 1.7 cents at $4.265 per 1,000 cubic feet.

In London, the Brent crude July contact was down 18 cents to $72.53 on the ICE futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.