Oil Futures Slip Below $70

The July delivery crude contract lost $1.46, or 2.1%, to settle at $68.75 a barrel.
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NEW YORK (

TheStreet

) -- Oil futures held below the $70-a-barrel mark during Tuesday's session as investors sold off risky assets amid mounting global growth concerns.

The July delivery crude contract, which settled just above $70 a barrel on Monday, failed to touch that level Tuesday. The contract had an intraday high of $69.91 and traded as low as $67.15 before settling down by $1.46, or 2.1%, at $68.75 a barrel.

"It's pretty clear that yesterday's pause was just that, but negative sentiment circling around Europe is still the driving factor," said Gene McGillian, analyst at Tradition Energy. Barring any major global economic catastrophes, he believes the $65 mark could serve as a backstop price.

Fresh jitters about sovereign debt risk out of Europe prompted a

global stock selloff. Earlier, the

The Associated Press

reported that

European Union commissioner Olli Rehn said growth could be capped at 1.5% without changes and high unemployment could linger over the next five years, reigniting concerns that a slowdown in the eurozone could stifle growth around the globe, hampering energy demand.

The market also watched

developments in Spain as

four banks in the nation said they were making merger plans because of solvency fears in the banking sector.

Though he was less convinced of the long-term ramifications, McGillian also highlighted South Korea's growing imbroglio with its northern adversary as another pressure on prices. The

BBC

reported that North Korea cut ties with South Korea after being implicated in the sinking of a South Korean military ship.

On the fundamental data front, the American Petroleum Institute said crude oil supplies rose by 616,000 barrels in the week ended May 21. Analysts surveyed by Platts have been expecting an increase of 100,000 barrels to crude stockpiles.

On Wednesday morning, the government's Energy Information Administration is set to release its own inventory report. In addition to the build in crude stocks, analysts are also projecting a 150,000-barrel increase to gasoline supplies and an additional 200,000 barrels of distillates, according to the Platts poll.

The euro lost ground again during Tuesday's session, and the greenback was higher across an array of currencies, with the dollar index up 0.4.

Oil-related stocks dove alongside the broader market, which traded roughly 2% lower for most of Tuesday's session before a late rally helped the

S&P 500

finish slightly positive. The energy sector got a lift from the last minute comeback and the NYSE Arca Oil index gained 0.04% while the Philadelphia Oil Service Sector index added 1.7%.

Chevron

(CVX) - Get Report

, which had been the

Dow Jones Industrial Average's

second-worst performing stock for most of the session, pared some of its losses but was still among the Dow's biggest laggards, along with

Exxon Mobil

(XOM) - Get Report

. The stocks finished down by 1.2% and 0.8%, respectively.

With

administration confidence waning in

BP

's

(BP) - Get Report

ability to contain the massive oil slick in the Gulf of Mexico,

BP was looking at several options to contain the gushing oil leak. The stock rose 1.7%, to $42.56.

Elsewhere on the Nymex, July natural gas futures gained 4 cents, or 1%, to settle at $4.11 per million British thermal units. Meanwhile, heating oil for July delivery lost 3 cents, or 1.5%, to settle at $1.88 a gallon, and July gasoline gave up 4 cents, or 1.9%, to settle at $1.92 a gallon.

-- Written by Sung Moss and Melinda Peer in New York

.