Wall Street's fears resurfaced Friday as investors were spooked by news of waning consumer confidence and sought the safe haven of the mighty greenback over commodity markets. As a result of the dollar's recovery from Thursday's crash, oil prices were chased back to the lower end of their current trading range on the New York Mercantile Exchange, while the natural gas price also paled in comparison to yesterday's close, but still remained above $5 per thousand cubic feet.
At the close of October, crude futures for December delivery flatlined at $77.00 on the NYMEX after hitting an intra-day high that touched $80 a barrel. Despite the nearly $3 loss today, oil prices are trading in their highest range of the year.
"Sometimes you look at the short-term movements and you see we're up by $2 and down by $2, but really we are in a big trading range," said Phil Flynn, vice president in charge of research for PFG Best in Chicago.
"I wouldn't read too much into this week's activity," Flynn added, referencing the market's response to this week's bearish EIA report and today's dampened spirits concerning the sustainability of a recovering economy.
"I think we're back to where we were a week before and that's in a higher trading range between $75 and $85."
Market Spooked by Fragile Economy
Helping to weigh down crude prices, U.S. stocks tumbled as concerns surfaced on whether the economy's recovery will be sustainable without government stimulus. Additionally, financials sank on a projected $10 billion write-down for Citigroup.
Both the S&P 500 and Nasdaq closed down for the month, ending seven straight months of gains.
"What a scary ending to Halloween week for the market as all those GDP good feelings got washed away in weakening consumer confidence and spending," noted Flynn. "The GDP was a very good number, it gave the marketplace a boost, but there are questions on whether or not the GDP is going to be sustainable as we go forward."
"But if you're 'bullish oil' and you were discouraged by today's sell-off, I wouldn't be that discouraged until we get below $75 a barrel," Flynn advised. "It was just a couple of weeks ago when we were wondering if we could get above $75 and stay there; we've done that, but I think we're testing the lower end of the range because the end of the month was a little weakened by economic data."
Natural Gas Loses Short-Covering Momentum
Heading into the Halloween weekend, natural gas futures traded higher during its earlier session, but ultimately settled lower than yesterday's close to $5.045 per thousand cubic feet.
"I think natural gas lost its short-covering momentum earlier in the session over concerns that the weaker stock market would suggest weaker demand for natural gas on the industrial side," said Flynn. "I think the weaker stock market raised questions just enough, and with supplies being at a record high, it was enough to take the natural gas market down at the end of the day."
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