Crude oil fell for a third day in New York as Asian equities tumbled and credit-rating downgrades on Greece and Portugal fanned concern global demand for fuel may be slow to recover.
Oil pared losses after the euro recovered against the dollar, bolstering the investment appeal of commodities as an inflation hedge.
"The euro is recovering - that's the reason why some traders are buying back," said Ken Hasegawa, a commodity derivates sales manager at broker Newedge in Tokyo. "Yesterday we saw sharp drops in crude oil, stock markets and the euro, so today we can see some rebound."
Crude oil for June delivery fell as much as 78 cents, or 1 per cent, to $81.66 a barrel in electronic trading on the New York Mercantile Exchange.
It was at $82.21 at 3:14 p.m. Singapore time. Yesterday, the contract dropped $1.76, or 2.1 percent, to settle at $82.44. That was the biggest decline since April 19th.
The 16-nation euro rebounded from near a one-year low against the dollar on speculation the International Monetary Fund will provide more aid to Greece.
The US currency was at $1.3196 per euro at 2:50 p.m. in Singapore, from $1.3175 yesterday in New York.
Asian stocks extended a global rout amid concern Europe's debt crisis will derail the global economic recovery.
US equities yesterday fell the most since February after European shares posted the biggest decline in five months.
Oil Supplies US crude oil stockpiles increased 5.3 million barrels last week, the American Petroleum Institute said yesterday.
Based on the industry group's data, that's the ninth weekly gain, bringing inventories to the highest since May 2009.
Supplies of distillate fuel, including heating oil and diesel, are expected to have risen 1.5 million barrels from 148.9 million. Refiners likely maintained operating rates at an average 85.9 percent of capacity after five weeks of increases.
"Below $81 we will see some fresh buying," said Hasegawa at Newedge. "Everyone is still expecting the world economy will rebound."
Bloomberg