Oil extends losses to near $76 amid euro concerns

Oil prices fell to near $76 a barrel Wednesday as investors weighed eroding global crude demand against the effects of a fragile euro.

By early afternoon in Europe, benchmark crude for June delivery was down 25 cents to $76.12 a barrel in electronic trading on the New York Mercantile Exchange. The June contract fell 43 cents to settle at $76.37 on Tuesday.

The Paris-based International Energy Agency said in its monthly oil market report that global oil demand was expected to rise less than previously expected in 2010. The IEA cut its forecast by a daily 220,000 barrels, to 86.4 million barrels a day, but still 1.62 million barrels a day higher than last year.

Crude traders have been eyeing the euro after European policymakers unveiled a $1 trillion debt bailout package earlier this week. Commodities priced in dollars, such as oil, become more expensive for investors holding euros as the dollar strengthens.

Oil has fallen from $87.15 a barrel on May 3 as the debt crisis undermined confidence in the euro, which touched a 14-month low of $1.2520 last week. The euro rose slightly, reversing earlier losses, to $1.2672 on Wednesday from $1.2641 on Tuesday.

Crude supplies rose less than expected last week, by 362,000 barrels, the American Petroleum Institute said late Tuesday. Analysts had expected an increase of 1.7 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

However, inventories of gasoline fell while distillates were little changed, the API said.

Despite the relatively bullish API figures, oil prices were unable to post gains. "This indicates a change of mood on the oil market, suggesting prices will drop further," said a report from Commerzbank analysts in Frankfurt.

The Energy Department's Energy Information Administration is scheduled to announce its supply report -- the market benchmark -- later Wednesday.

In other Nymex trading in June contracts, heating oil was up 1.44 cents to $2.1545 a gallon and gasoline rose 0.33 cent to $2.1985 a gallon. Natural gas gained 1.6 cents to $4.147 per 1,000 cubic feet.

In London, Brent crude was up 49 cents to $80.98 on the ICE futures exchange.