U.S. oil prices fell for the seventh time in eight sessions on Thursday on worries that fiscal problems in Europe could stifle global economic growth and energy demand.
The expiring June contract on the New York Mercantile Exchange tumbled nearly 3 percent, briefly touching a nine-month low, in thin trade as remaining open interests were either rolled to the next month or sold, in an effort to avoid physical delivery.
Oil prices are sliding on liquidations ahead of the June contract's expiration and as we have a glut of oil in the Cushing, Oklahoma, delivery point, said Phil Flynn, an analyst at PFGBest Research in Chicago.
U.S. crude for June delivery settled down $1.86 at $68.01 a barrel, down more about 22 percent from the 19-month high of $87.15 hit on May 3. In equities markets, a drop of 20 percent usually indicates a bear market. June crude hit an intraday low of $64.24, the lowest since July 30.
Investor caution also battered the rest of the oil complex, with the July contract, which becomes the front month on Friday, down $1.68 to $70.80 a barrel.
The June premium to the July contract widened to $2.79, from $2.61 at the close on Wednesday. In London, ICE July Brent crude futures fell $1.85 to end at $71.84 a barrel, after touching $70.20, the lowest since February 9.
On Wall Street, all major equities indexes were down more than 2 percent in late trading on growing fears that the euro zone's handling of its sovereign debt crisis could jeopardize global economic growth. The Standard & Poor's 500 Index <.SPX> has fallen more than 10 percent from its April high, signifying a correction. <.N>
The fiscal crisis in Europe has been an eye-opener for markets. Even though we have a recovery, it's clear that it will be slow and painful, and it's the same for oil demand, said Christophe Barret, oil analyst at Credit Agricole CIB.
A slew of U.S. data on Thursday also stoked risk aversion. Weekly filings for new U.S. jobless claims rose unexpectedly and an April index of U.S. leading economic indicators marked its first decline in more than a year.
The euro fell against major currencies, remaining vulnerable on concerns other European countries may announce regulations similar to Germany's ban on naked short-selling of some stocks and bonds.
Further pressure on oil came after industry data provider Genscape said that crude stored at the delivery hub in Cushing, Oklahoma, rose 500,000 barrels in the week to May 18. [ID:nN20142515] The U.S. Energy Information Administration on Wednesday reported that stocks at the Cushing delivery point rose 900,000 barrels to a record 37.9 million barrels in the week to May 14.
Oil's decline was part of a slump in an array of commodities on Thursday. The 19-commodity Reuters-Jefferies CRB index <.CRB>, a global commodities benchmark, fell 1.3 percent, having tumbled earlier to its lowest level since September.
Crude prices this week have fallen below the $70 to $80 a barrel range that many members of the Organization of the Petroleum Exporting Countries have said is fair for both producers and consumers. But OPEC officials have stopped short of calling for any immediate steps to prop up the market.
The producer group's seaborne exports, excluding Angola and Ecuador, were forecast rising 280,000 barrels per day in the four weeks to June 5, according to a weekly estimate by UK consultancy Oil Movements released on Thursday.
(Additional reporting by Matthew Robinson and Robert Gibbons in New York; Emma Farge in London; Judy Hua in Singapore; Editing by Walter Bagley)