Rolling in a new front-month contract, U.S. crude oil futures slid toward $76 on the New York Mercantile Exchange Thursday as traders' risk aversion for the energy commodity was incited by an unexpected build in gasoline supplies in the week to Jan. 15.
Retreating economic optimism on the domestic front drove the price of light, sweet crude oil for March delivery down by more than a dollar to $76.08 a barrel on the NYMEX. Conversely, natural gas spot prices at the Henry Hub moved into positive territory today, the higher price of $5.615 per thousand cubic feet spurred by a sharp drawdown in natural gas storage by 245 Bcf.
Today, oil extended losses alongside Wall Street following President Obama's announcement to limit risk-taking at certain banking institutions. Both the Dow and S&P 500 indexes closed out their lowest sessions since late October, according to Reuters. Stoking additional economic concerns, U.S. workers filing for unemployment benefits reportedly rose for the third week in a row.
Losing underlying fundamental support, the oil complex was further pressured by the EIA's delayed products report, which indicated that gasoline inventories climbed by 3.9 million barrels for a third consecutive week.
Shrugging off last week's fall in crude oil and distillate stocks, investors instead focused on gasoline's higher-than-anticipated build coupled with the downward trend of refinery utilization, the capacity of which now stands at 78.4%.
"The oil market came under a lot of pressure today," reflected Gene McGillian, analyst and broker at Tradition Energy in Stamford, CT. "There seems to be a rising awareness that the economics that should be getting better to help boost energy demand are not turning out the way the market anticipated."
"Today's DOE report is also a sign that the fuel demand levels are pretty anemic, and that's why oil prices are having a difficult time maintaining anything above $80," McGillian added.
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