NEW YORK (Reuters) - U.S. oil prices fell a fifth straight session and settled at a five-month low on Monday as the dollar surged against the euro and energy markets fretted over swollen U.S. oil inventories and signs that China's growth may have peaked.
"Concerns about deflation, the European Union and the euro are bringing down most commodities. And it brings back a focus on fundamentals and supplies, which are high," said Phil Flynn, analyst at PFGBest Research in Chicago.
After U.S. oil futures hit a 19-month high at $87.15 on May 3, mounting worries about Europe's debt problems and high oil inventories pushed crude futures prices as low as $69.27 on Monday, a 20.5 percent drop from that May 3 peak and their weakest since December 14, 2009.
On Monday, U.S. crude for June delivery fell $1.53, or 1.53 percent, to settle at $70.08.
Trading volume was heavy ahead of the June contract's expiration on Thursday.
In London, July Brent crude fell $2.83 to settle at $75.10 a barrel.
The euro tumbled against the dollar for a fifth straight session, dropping to a four-year low on nagging fears euro zone austerity measures will cause a downturn in the region and curb global growth.
The dollar .DXY gained 0.6 percent against a basket of currencies.
A strong U.S. currency often pressures commodities by making dollar-denominated commodities, such as oil, more costly for holders of other currencies and by attracting investors out of commodities and into the foreign exchange market.
U.S. stocks fell for much of the session, then bounced and rallied late as bargain hunters set aside concerns about the economy and snapped up shares that had been knocked lower.
The main stock index in Shanghai .SSEC fell 5.1 percent to its lowest close in a year and its steepest one day fall in eight months.
A gauge measuring China's economy showed that growth may have already peaked. The Conference Board said its leading economic index for China, released for the first time, rose to 144.5 in March, up 1.1 percent from February.
Tested over four years, the index has proved able to flag turning points of Chinese economic cycles, the board said.
Stockpiles of crude at Cushing, Oklahoma, the delivery hub for the U.S. contract's West Texas Intermediate benchmark crude, have risen in the last eight weeks to a record high 37 million barrels, pushing front-month U.S. crude down relative to later futures contracts and the other global crude benchmark, Brent.
"The product markets and deferred crude contracts provided downside leadership for a change as the June WTI crude contract is undergoing some positioning ahead of Thursday's expiration," said Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.
He added that last week's "huge contango in the $4-5 per barrel zone (is) unlikely to be seen again and we still expect the front WTI spread to expire within the $2.50-3.50 a barrel zone."
The market will get the weekly U.S. oil inventory snapshots from industry and government, starting with the American Petroleum Institute's report on Tuesday afternoon.
Analysts surveyed by Reuters on Monday expected crude oil and distillate stocks to have increased last week, while gasoline stocks were expected to have declined.
Reporting by Robert Gibbons; Additional reporting by Gene Ramos in New York, Christopher Johnson in London and Judy Hua in Singapore; Editing by David Gregorio