Escalating fears about the Chinese and U.S. economies supplanted waning concerns about a potential disruption to U.S. crude oil inventories, resulting in a down day for oil Wednesday.
February crude oil lost 52 cents to end the day at $90.86 a barrel. With the Trans Alaska Pipeline again operating after leak-induced shutdowns, the possibility of a major supply disruption—which some considered a stretch to begin with—has vanished.
In fact, investors Wednesday contemplated an oversupply situation based on economic news from both sides of the Pacific. Recent efforts by the Chinese government to rein in inflation are expected to cool off rapid economic growth there. In the U.S., meanwhile, the country's Commerce Department released a statistic indicating that the national housing market remains very volatile: a 4.3-percent drop in December housing starts.
Front-month crude oil peaked at $92.10 and bottomed out at $90.47.
Natural gas for February delivery surged three percent Wednesday on expectations that heating demand throughout the eastern half of the U.S. will be strong for the remainder of the month. Gas futures settled at $4.56 per thousand cubic feet, a 13.5-cent gain from Tuesday, after forecasters predicted colder-than-expected temperatures for that time frame.
Natural gas traded within a range from $4.41 to $4.57 Wednesday.
February gasoline remained flat at $2.48 a gallon after fluctuating from $2.47 to $2.50.
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