Oil falls more than 3 percent; energy drags down global stocks
By Caroline Valetkevitch
NEW YORK (Reuters) - Oil prices dropped more than 3 percent on Wednesday following a surprise increase in gasoline inventories, and declines in energy shares weighed on U.S. stocks.
The dollar recovered from recent weakness against the euro EUR= and the safe-haven yen JPY=, while sterling was off six-month highs hit after Britain's prime minister on Tuesday called for a snap election.
Investors also braced for the coming French election. Four days before the first round of the presidential election in France, just a few points separate the top four candidates, including two who oppose the euro - the far-right's Marine Le Pen and the far-left's Jean-Luc Melenchon, according to opinion polls.
In the oil market, the counter-seasonal build of 1.5 million barrels in gasoline in the latest week, along with an increase in U.S. production, pressured prices.
U.S. crude futures CLc1 fell 3.8 percent to settle at $50.44, while Brent crude futures LCOc1 dropped 3.6 percent to $52.93.
The oil losses hurt shares of U.S. energy companies, pushing the S&P 500 energy index .SPNY down 1.4 percent and causing the benchmark S&P 500 .SPX index to reverse earlier gains.
"Crude broke $52 on WTI, that is the strongest correlation we have right now away from the case-by-case earnings we have," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
U.S. first-quarter earnings so far have been mostly stronger than expected. On Wednesday, shares of Morgan Stanley (MS.N: Quote) rose 2 percent following the bank's results, though International Business Machines (IBM.N: Quote) dropped 4.9 percent and pressured the Dow. Continued...