Oil's Arrow Points Down on Fiscal Policy Concerns
Climbing to an intra-day high above $75, crude oil futures ultimately retreated on the New York Mercantile Exchange Tuesday as oil traders' risk aversion sparked by China's closing wallet outweighed escalating consumer confidence in the U.S.
Having shed nearly $10 from this year's record highs, the price of light, sweet crude oil for March delivery picked up its recent losses on the NYMEX with a downward movement to $74.71 a barrel.
Likewise, the February front-month contract for natural gas spot prices at the Henry Hub also trended lower during Tuesday's session, settling at a final price tag of $5.485 per thousand cubic feet.
Technical support was bled from the market earlier on when lackluster home price data on the domestic front and fiscal tightening abroad incited concerns over worldwide economic stimulus.
However, an upbeat report spotlighting rising U.S. consumer confidence for a third consecutive month, in addition to Wall Street's glee over better-than-expected quarterly results out of the big studs, Travelers and Apple, helped give equities a boost.
Moreover, the dollar's safe haven demand was ignited today as China put in motion a plan to curb credit lending and increase required reserves at its banking institutions.
"I think what you're seeing is the continued effects of worries over the measures the Chinese are undertaking for their lending," commented Gene McGillian, analyst and broker at Tradition Energy in Stamford, Connecticut.
"China's economic growth has been the primary fundamental reason why oil prices were able to move past $80 in the last six months," the analyst explained. "And when China begins to curtail some of that growth, it's going to play out into reduced demand for oil."