Oil prices slip as markets fear European financial crisis

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Benchmark crude for delivery next month was down $1.35 to $70.26 a barrel at midday Singapore-time in electronic trading on the New York Mercantile Exchange. The June contract lost $2.79, almost 4%, to settle at $71.61 on Friday.

Crude fell as low as $69.82, the lowest since $69.59 on February 5, as the US dollar gained against the euro. Oil, which is priced in dollars, becomes more expensive to investors holding other currencies when the dollar advances.

The euro fell to $1.2275 today from $1.2352 on Friday while the dollar slid to 91.88 yen from 92.30 yen. Asian stock markets also plunged. Oil investors often look to equities as a sign of overall investor confidence.

"It's a sea of red out there," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "The euro concerns have really impacted confidence among investors across markets. Oil will be under pressure as long as the dollar is surging."

In other Nymex trading in June contracts, heating oil fell 1.64 cents to $2.1155 a gallon, and gasoline fell 1.7 cents to $2.178 a gallon. Natural gas was down 0.6 cents at $4.333 per 1,000 cubic feet.

In London, Brent crude was down $1.57 to $78.54 on the ICE futures exchange.