Crude Continues Downward Spiral toward $73
Falling below its 200-day moving average of $73.66 on the New York Mercantile Exchange Wednesday, U.S. crude futures came under pressure as oil traders continued to sell off the energy commodity, spurred by today's weekly inventory report spotlighting an additional build in petroleum products.
As the greenback topped a six-month high against the euro today, the price of light, sweet crude oil for March delivery slid to $73.67, shedding more than a dollar from yesterday's final price tag after hitting an intra-day high just above $75.
Also closing on the downside Wednesday, natural gas spot prices at the Henry Hub lost ground near the energy commodity's previous target price of $6 to $5.274 per thousand cubic feet.
Today, Wall Street took a hit after a disappointing report showing lower sales data for newly built single-family homes.
On the commodities front, the EIA's inventory report underscored rising distillate stocks by 400,000 barrels and increased gasoline stocks by 2 million barrels.
"There is a lot of talk about rising inventories and weak demand, and it's really starting to take its toll on the oil market," noted Phil Flynn, senior market analyst at PFG Best in Chicago.
"Today we saw that the dollar had a strong move upward on continuing concerns about the eurozone's [fiscal health] as well as concerns about the domestic economy and interest rates," Flynn added.
"Right now, oil is going to be under pressure because of concerns about weakening demand," the analyst continued. "This week, the most significant thing we've seen that has taken the wind out of the oil bulls' sails has been the Chinese government's talk of raising reserve requirements, which has really weighed on oil prices," he said.