Crude oil futures continued to weaken Friday despite support from the equity and currency markets, a sign that economic worries are testing investors' faith that future oil demand will catch up with today's high supply levels.

Light, sweet crude for July delivery settled down 76 cents, or 1.1%, at $70.04 a barrel on the New York Mercantile Exchange. Brent crude on London's ICE futures exchange settled down 16 cents, or 0.2%, at $71.68 a barrel.

"We shrugged off positive gains in equity prices and a sell-off in the dollar," said Gene McGillian, an analyst with Tradition Energy in Stamford, Conn. "I think basically the negative economic sentiment that's driven oil prices almost $20 lower in the last three weeks, combined with the weak fundamental picture, continues to depress the markets."

The passage of a financial-overhaul bill by the U.S. Senate boosted the stock market Friday and a vote by the German parliament to approve its contribution to a euro-zone aid package helped the euro recover some ground against the dollar in recent trading. Both factors helped oil cut early losses and even turn positive briefly during the trading day, but the effect didn't last.

Oil prices have been especially vulnerable to a drop because they rose despite growing oil supplies based on the hope that an economic recovery would lead to increased demand. Since debt problems in Europe have thrown that recovery into doubt, oil has retreated sharply, falling over the last three weeks from a high of $87.15 a barrel to a low of $64.24 a barrel in the June contract, which expired Thursday. Oil has fallen 20% from its May 3 high to Friday's close, compared with a 9% drop in the Dow Jones Industrial Average over the same period.

"The oil market has been overvalued for a year. Prices have run up and haven't matched the fundamentals," said Tom Bentz, a broker and analyst with BNP Paribas Commodity Futures in New York. "All of a sudden now everything is falling and we're catching up to what the fundamentals have been saying for a long time."

On Wednesday, the U.S. Energy Department reported that the physical supply point in Cushing, Okla., that underpins the Nymex futures contract swelled to a record 37.9 million barrels. Available capacity at Cushing is thought to be between 40 million and 50 million barrels.

The spread between the front-month oil futures contract and longer-dated contracts, or contango, widened Friday, to about $1.50 a barrel between the July and August contracts, from about $1.00 a barrel earlier. A wider contango is sometimes seen as a sign that oil could be headed lower, as it reflects an oversupplied market.

"I wouldn't be an overall bull in the marketplace, especially with the contango moving out," said Tony Rosado, a broker with GA Global Markets in New York.

Recent data from the Organization of Petroleum Exporting Countries, a major foreign suppliers group, showed the daily price of its crude oil reference basket falling below $70 a barrel for the first time since February. Many analysts believe that a sustained drop in prices below $70 a barrel will spur OPEC to officially tighten output restraints in an attempt to clear oversupply and bloated inventories. Several OPEC ministers have said the group is closely monitoring the market, but doesn't plan to review output policy until its next scheduled meeting in October.

Front-month June reformulated gasoline blendstock, or RBOB, settled 0.33 cent, or 0.2%, lower at $1.9612 a gallon. June distillates, which include heating oil and diesel fuel, settled 0.52 cent, or 0.3%, lower at $1.8967 a gallon.


More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:


Nymex Light Crude Oil Close
Nymex Harbor RBOB Gasoline Close
Nymex Heating Oil Close
ICE Brent Crude Oil Close
ICE Gas Oil Close

-By Edward Welsch, Dow Jones Newswires; 613-237-0669; edward.welsch@dowjones.com