Oil Sticks to $85 as Supplies Continue to Rise
Losing steam on the New York Mercantile Exchange, crude oil futures were unable to pare yesterday's losses and resume a weeklong rally that pushed prices above an $87 intra-day high.
Pressured by a stronger greenback and yesterday's bearish inventory builds, benchmark crude for May delivery edged down to $85.39 a barrel Thursday, while NYMEX gasoline futures also settled down for a consecutive session to $2.30 a gallon.
"This market was running up on a lot of non-commercial or investment buying," said Darin Newsom, senior analyst with DTN, a market information service in Omaha, Nebraska.
"The underlying fundamentals remain bearish," explained Newsom, underscoring the primary resistance factor limiting crude's run up to $90 a barrel.
"Without the support from the underlying fundamentals, oil prices were getting a bit top heavy and have come under pressure late in the week," he added. "Long liquidation is most likely what's been driving crude futures down."
Natural Gas Drops Below Threshold
On the domestic energy front, natural gas spot prices at the Henry Hub notched below a $4 threshold on the NYMEX, closing the session in negative territory at $3.91 Mcf.
"As the Dow climbs closer to 11,000, we saw some short-covering by the non-commercial side in natural gas," Newsom said.
"Supplies are still bearish, and there's really no reason outside of a short-covering rally for natural gas to see much strength," the analyst contended.
According to the EIA, the implied net injection for the previous week was 31 Bcf. As of Apr. 2, natural gas in storage was 1,669 Bcf, or roughly 12% above the five-year average.
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