Oil Trends Near $73 on Weak Technical Support
Trending lower for a third session on the New York Mercantile Exchange, crude oil futures came under additional pressure on Thursday as U.S. stocks moved to the downside and demand worries stoked technical traders' risk aversion.
Hovering close to yesterday's final price tag, crude oil for March delivery closed only a few cents lower to $73.64 on the NYMEX.
Despite earlier gains on Wall Street spurred by President Obama's State of the Union address Wednesday evening, today's weaker-than-expected durable goods data and smaller-than-anticipated reduction in weekly jobless claims put a damper on both the equities and commodities markets.
"Oil markets are still in a trading range between $70-$80, and we've recently gone down to the lower end of that," reflected Bill O'Grady, the chief markets strategist at St. Louis-based Confluence Investment Management LLC.
"China has probably been the primary catalyst for the recent sell-off," O'Grady added, echoing a concensus of analysts. This week, oil traders have worried over the Far Eastern country's fiscal tightening, which could potentially trim some of the demand growth in an increasingly petroleum-driven region.
Also extending losses today, natural gas spot prices at the Henry Hub for March delivery trailed the bottom of its trading range to settle at $5.138 per thousand cubic feet.
This morning, the EIA reported that domestic natural gas storage fell 86 Bcf last week, which was less than the consensus expectation of a draw of 108 Bcf. With U.S. natural gas storage now totaling 2,521 Bcf, inventories are tracking 120 Bcf (5%) above last year's levels and 87 Bcf (4%) above the five-year average.
"Natural gas, because of the advent of shale, is probably going to range between $4-$6 for some time," O'Grady contended. "In that range, the market will get enough drilling activity to keep supplies relatively high."